INFORMATION AND COMMUNICATION TECHNOLOGY ADOPTION AND INCLUSIVE GROWTH IN WEST AFRICA

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ABSTRACT


West African countries experience economic growth in terms of financial figures but the issue of non -inclusiveness of this growth in terms of human development is becoming worrisome. This study empirically examines the role of information and communication technology adoption on human development and the direction of causality between them using data for 15 West African countries (2004 – 2014) estimated with the system Generalised Method of Moments (GMM) and Granger causality test. The GMM results showed that internet usage and investment in telecommunications have a statistically significant relationship, while mobile cell subscription has a statistically insignificant relationship with human development. The Granger causality test result showed that ICT adoption does not granger cause inclusive growth at the immediate and next annual time period. The study concludes by recommending the increase in investment in the telecommunications industry, the rendering of tax holidays to domestic firms in the IT industry, the creation of awareness of the productive use of ICT in all sectors of the economy for human development and inclusive growth to be achieved overtime.


TABLE OF CONTENTS

TITLE PAGE
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
LIST OF ABBREVIATIONS
ABSTRACT

CHAPTER ONE: INTRODUCTION
1.1       Background to the Study
1.2       Statement of the Research Problem
1.3       Research Questions
1.4       Research Objectives
1.5       Research Hypotheses
1.6       Scope of the Study
1.7       Sources of Data
1.8       Method of Analysis
1.9       Significance of the Study
1.10     Outline of the Study

CHAPTER TWO: LITERATURE REVIEW
2.1       Review of Conceptual Issues
2.1.1    Information and Communication Technology
2.1.2    Inclusive Growth
2.2       Review of Theoretical Issues
2.2.1    Technology Acceptance Model
2.2.2    The Unified Theory of Acceptance and Use of Technology
2.2.3    Technology- Organisation – Environment Model
2.2.4    Diffusion of Innovation Theory
2.2.      Search and Matching Theory
2.2.6    The Endogenous Growth Theory and Schumpeterian Model of Growth
2.3       Review of Empirical and Methodological Issues
2.4.      ICT Adoption Pass-through Framework – Application of Theories
2.5.      Other Models on ICT Framework
2.6.      ICT Adoption, Economic Progress, Human Development and Inclusive Growth
2.7.      Limitations of ICT Adoption in West Africa
2.8.      The Down-Side of ICT Adoption in West African countries

CHAPTER THREE: STYLISED FACTS
3.1.      Human Development Index
3.2.      Gross Domestic Products per Capita (GDPPC)
3.4.      The Number of Internet Users (INTUS)
3.5       Mobile Cellular Subscribers (MCS)
3.6.      Fixed Telephone Lines (FXTL)
3.7       Investment in Telecoms (INVIT)
3.8       Rule of Law (Rule)
3.9       Domestic Credit to Private Sector (Percentage of GDP)
3.10     Primary School Enrolment Rate (percentage of female)

CHAPTER FOUR: METHODOLOGY
4.1       Theoretical Framework
4.1.1    Diffusion Theory of Innovation and Schumpeterian Model of Growth
4.2       Method of Analysis
4.2.1    Model Specification
4.2.2    Apriori Expectations
4.3       Technique of Estimation
4.3.1Panel - Granger Causality Test
4.3.2Generalised Method of Moment
4.4. Data Sources and Measurement of Variables

CHAPTER FIVE: RESULTS AND DISCUSSIONS
5.1.      Descriptive Analysis
5.2.      Empirical Analysis and Discussion
5.2.1 Multicollinearity Test
5.2.2 Panel System – GMM Estimates
5.2.3 Granger Causality Test

CHAPTER SIX: RECOMMENDATIONS AND CONCLUSION
6.1       Summary
6.2       Recommendations
6.3. Contribution to Knowledge
6.4. Conclusion
6.5       Limitations of the Study and Suggestions for Further Studies

REFERENCES


CHAPTER ONE

INTRODUCTION



1.1        Background to the Study

Fundamental questions such as “what has been happening to poverty, unemployment and inequality?” were asked by Dudley Seers at a conference presentation in New Delhi (1969), which have generated contemporary relevance. Seers noted that if one or two of the three (poverty, inequality and unemployment) is increasing; it will be strange to say that the country concerned is achieving development - inclusive growth. These questions take into cognisance the social factors such as the standard of living of the populace in the definition of development. It buttresses further, the importance of inclusive growth.

Statistics show that economic growth has a significant role to play for the decline of poverty, inequality and unemployment in all economies. The level of poverty and inequality in relation to the economic growth rate in West African countries leave researchers in a quandary- dilemma (Abejo, 2013). In 2003, the growth rate of Gross Domestic Products (GDP) of Nigeria was 10.4 percent, which grew to 33.7 percent by 2004 (World Bank, 2016). As at 2013, there was an increase in the growth rate by 6.3 percent which showed increase but at a decreasing rate. Cape Verde (2007 - 2011) experienced an average GDP growth rate of 5.8 percent while Ghana experienced an average growth rate of 8.3 percent within that same period (Trading Economics, 2016). This growth was accompanied by improved market dynamics, increase in economic activities and despite that, the level of poverty, inequality and unemployment still don’t seem to be decreasing at a fast pace.

Poverty and Inequality levels are relatively high in West Africa. The Poverty headcount ratio statistics at $1.9 per day (2011 PPP - percent of population) shows that the percentage of poor people compared to the total population in West Africa reduced from 58 percent to 45 percent as at 1990 and 2010 respectively after much fluctuations and later increased to 45 percent at 2015 (World Bank, 2016).Despite this reduction, the rate is still very high compared to the total population. The Gini coefficient index of some countries in West Africa like Nigeria shows that West Africa is approaching the line of inequality despite the recent fall from 51.9 percent in 1996 to 42.9 percent in 2016. Unemployment rate in West Africa was varied for the different countries; having a range of at most - 30 percent and at least - 6 percent overtime (Trading Economics, 2016).

Statistics specifically, in terms of human development show that the average life expectancy for West African countries such as Cape Verde (male - 75 years; female - 71.4 years), Sierra Leone (male – 51.4; female –50.4), Niger (male – 62.4; female – 60.6), Nigeria (male – 53.1; female – 52.4), Mali (male – 57.8; female – 58.2) and the expected year of schooling (education) for West African countries such as Cape Verde (male - 13.1; females - 13.9),Sierra Leone (female – 7.2; male - 10), Nigeria (female – 9.8; male -8.2), Mali (female – 9.3; male – 7.5). Countries with high inclusive growth and human development are characterised by average life expectancy of 86 (females) and 80 (for males) and a range of expected schooling year of 17 – 20 years (for females) and 16 to 19 years (for males) (UNDP, 2015). It is evident for West Africa that during the period of exponential economic growth, the levels of inclusiveness in terms of education attainment levels, health care availability, and so on did not increase significantly and responsively. It can be seen here that for countries to experience inclusive growth, economic or financial improvement alone is not sufficient.

There is an accord in the existing literature that being a knowledge-based economy is crucial to achieving inclusive growth (Tchamyou, 2015; Kuada, 2015; Asongu & Le Roux, 2016). The World Bank’s Knowledge Economy Index (KEI) comprises of three components – “education, Information and Communication Technology (ICT) and innovation”. Among the components, ICT is probable to exert the highest impact on economic and human development landscapes because of its potential for wide and fast adoption and penetration (Asongu & Le Roux, 2016). Knowledge-based economies have a higher chance of confronting the challenges that globalisation poses to development. The Asian tigers have shown that countries of the world can leap-frog the stages of development and achieve sustainable development by applying the Knowledge - Economy principle (Johnson, 2016).

ICTs are referred to as “General Purpose Technologies" (GPTs) by economists (Atkinson, 2009). GPTs are technologies that cut across all sectors of the economy and are known to have practical usefulness in those sectors. ICTs have been found to increase productivity and output, reduce cost of transportation and many other benefits. According to World Bank Report (2009), there was a 1.3 percent growth increase with every 10 per cent rise in the speed of internet connection.

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