The Nexus Between ICT Diffusion, Financial Development, Industrialization and Economic Growth: Evidence from Sub-Saharan African Countries

Abstract

This study examines the nexus between ICT diffusion, financial development, industrialization, and economic growth using a novel panel VAR approach in the generalized method of moments (GMM) estimation. Different proxies were used to measure the aforementioned variables, diverging from the commonly used measures in prior literature. Based on panel data covering 45 countries from 2000 to 2018, the empirical results suggest that there is bidirectional causality between ICT diffusion and economic growth, financial development and industrialization, financial development and economic growth, as well as industrialization and economic growth. The findings further provide evidence that financial development, levels of industrialization, and economic growth are not significant or positive predictors of ICT diffusion. The study’s implications for policy are profound, suggesting that SSA governments should adopt a holistic approach to economic policy development, integrating ICT, financial, and industrial policies to harness these interdependencies effectively.