Institutional quality effect of ICT penetration: Global and regional perspectives

Abstract

Background: As countries at global and regional levels work towards achieving the United Nations Sustainable Development Goal (SDG) 16, which emphasises the establishment and promotion of strong and inclusive institutions, there is a growing urgency to harness the power of information and communications technology (ICT) penetration in order to accomplish this objective. Hence, the rational for this study. Aim: The institutional quality effect of ICT penetration (ICTP) is investigated at global and regional levels. Setting: Annual panel data for 183 countries spanning 2003–2021 are utilised. The countries were further disaggregated to five major regions. Method: We applied the Two-Step System-Generalized Method of Moments (SGMM) estimation approach that incorporate forward orthogonal deviations to achieve the objective of the study. Results: The results of the SGMM analysis demonstrate a statistically significant and positive effect of ICTP on institutional quality at the global level. However, the effect varies significantly at the regional level. Conclusion: Overall, considering the inclusion of other control variables in the estimations, it is indicated that global and regional governments, as well as policymakers, could accelerate the achievement of institutional quality by strategically harnessing the potential of ICTP. Contribution: This study makes a valuable contribution to the existing literature by revealing the impact of ICTP on institutional quality at both global and regional levels. To address endogeneity concerns, the Two-Step SGMM methodology is employed, offering a robust analytical framework for analysis.