ICT Infrastructure and Economic Growth Evidence

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ICT INFRASTRUCTURE AND ECONOMIC GROWTH: EVIDENCE FROM ASEAN-5

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3rd INTERNATIONAL CONFERENCE ON BUSINESS AND ECONOMIC
1742 RESEARCH ( 3rd ICBER 2012 ) PROCEEDING
12 - 13 MARCH 2012. GOLDEN FLOWER HOTEL, BANDUNG, INDONESIA
ISBN: 978-967-5705-05-2. WEBSITE: www.internationalconference.com.my
ICT INFRASTRUCTURE AND ECONOMIC GROWTH: EVIDENCE FROM ASEAN-5 USING

PANEL DYNAMIC OLS ANALYSIS
Jamilah Mohd Mahyideen
Faculty of Business Management
Universiti Teknologi MARA Melaka
jamieawe@yahoo.com
Normaz Wana Ismail, PhD*

Faculty of Economics and Management
Universiti Putra Malaysia
nwi@econ.upm.edu.my
ABSTRACT
In this study, we investigate empirically the contribution of information and communications technologies (ICT)
infrastructure, in affecting economic growth in selected ASEAN countries over the period 1980–2009. The studies of
ICT infrastructure have received so much attention in recent studies due to its potential role to contribute to more
rapid growth and productivity gains. However, empirical evidences on the importance of ICT infrastructure for
growth performance, particularly for ASEAN countries, have been very scarce in the literature. This study examines
the contribution made by ICT using more recent data. The availability of ICT infrastructure is captured by fixed line
mobile phone subscribers (per 100 inhabitants). In addition, this study also includes another two measures of ICT
which are mobile cellular subscription (per 100 inhabitants) and internet users (per 100 inhabitants). By employing
panel dynamic OLS (DOLS) regression methods, the results suggest a significant and positive correlation for all three
variables that capture ICT infrastructure. The study concluded that ICT infrastructure indeed a key driver for ASEAN
growth performance.
Field of Research: ICT Infrastructure, economic growth, panel data.
_________________________________________

Corresponding author: email: nwi@econ.upm.edu.my
Any remaining errors or omissions rest solely with the author(s) of this paper.
1. Introduction
Infrastructure has long been well recognised for the role it plays in the country’s development. The relationship
between infrastructure and economic growth has been studied extensively in literature (for examples Aschaeur,
1989a, 1989b; Munnel, 1992; Canning, 1999; Calderon & Serven, 2003; Calderon, 2009) and reviewed in the World
Bank report (1994). Infrastructure, as defined by World Bank (1994) includes public services (power and gas, water
and sanitation, public works (roads), other transportation (harbours and airports) while Gramlich (1994) defines
infrastructure as “the tangible capital stock owned by the public sector”. Infrastructure has become one of the
popular themes covered in economic literature and has been recognised as an important element in sustaining and
promoting growth. World Bank, in its World Development Report (1994), concluded that the reason why East Asia’s
growth was much faster than sub‐Saharan Africa’s was because of its infrastructure investment. The development
and maintenance of infrastructure is expected to contribute to future economic growth especially in developing
countries where infrastructures are still insufficient.
There are many aspects of infrastructure such as transport (e.g; roads, railways, air transport and ports),
information and communication technologies (ICT) (e.g; teledensity, density of computers and internet), energy and
financial infrastructure. While all these aspects of infrastructure are important for driving country’s growth and
development, more attention however has been given to ICT infrastructure. It has been identified as one of the
important aspects of infrastructure especially in the era of economic reform. The important role of ICT
infrastructure as one of the powerful tools to boost economic growth is supported in 2001 OECD Ministerial report
“The New Economy: Beyond the Hype”, where ICT is realized to have potential to contribute to more rapid growth
in the future. Grace, Kenny, and Qiang (2003) define ICT as tools that facilitate the production, transmission, and
processing of information. The term ICT refers to traditional technologies as well as newer technologies. Examples
of traditional technologies are radio and television while the newer technologies are phone, computer and internet.
However, in this study, we only focus in the aspects of newer technology.
The literature has identified ways through which ICT infrastructure may contribute to growth. One of them is
through increasing productivity across all sectors. For instance, ICT allows better intrafirm communication and thus
result in better management (Grace, Kenny, and Qiang, 2003). Besides increasing productivity, ICT also promoting
better governance through increased participation, accountability, efficiency and transparency in the public sector.
In addition, the contribution of ICT can be through improved networking such as access to new markets or service.
Access to new market can help market expansion and achieve economies of scale and lower transaction costs. This
is very crucial as today’s global economy requires not only a modern but also efficient information infrastructure.
Another way of how ICT can influence growth is through improving information flows and thus reducing the cost of
retrieving information. Thus, market can perform better with good communication network. Sridhar and Sridhar
(2007) point out that ICT increases information regarding prices, job opportunities, and markets. Having good
communication networks is very important especially when it involves costly physical transport.
Despite the importance of ICT infrastructure, there continue to be marked differences in the distribution of ICT
across ASEAN countries. As shown by Figure 1, there is a marked difference among ASEAN countries with regard to
the number of fixed telephone subscribe per 100 inhabitants. The number of subscription is very low in Cambodia,
Myanmar, Laos, Philippines and Indonesia while Singapore records the highest number for the year 2010 followed
by Brunei and Vietnam. It is interesting to note that in 2000, the number of subscription per 100 people in Vietnam
was only 3.2, which is among the lowest, before increase substantially to reach 18.67 in the year 2010. Its great
improvement not only occurred in the case of the fixed line subscription but also for the mobile cellular subscription
as shown by Figure 2. Vietnam stood up having the highest number of mobile cellular subscription in the year 2010
among ASEAN countries as compared to being the third lowest in the year 2000. Other countries that have high
number of subscriptions are Singapore, Thailand, Brunei and Malaysia while the rest of ASEAN countries are left far
behind. Both figures also reveal that mobile subscribers per 100 inhabitants in all ASEAN countries, except
Myanmar, is now higher than the fixed line subscribers per 100 inhabitants although it had started to widespread
only at the end of 1990s. Rapid increase in the mobile phone penetration and coverage could be a result of
liberalization of telecommunication sector in most of the countries.
Besides fixed and mobile phone subscriptions, another aspect of ICT infrastructure is the density of computer and
internet. For that, Figure 3 depicts the percentage of individuals using internet. As shown, Singapore records the
highest percentage of internet users followed by Malaysia and Brunei. Except Myanmar, all other countries have
recorded tremendous increment rate between 2005 and 2010. Similarly, Singapore, Malaysia and Brunei find
themselves occupy the top three in terms of the number of subscribers for fixed internet and fixed broadband while
the rest of the ASEAN countries occupy the bottom seven positions, as shown by Figure 4 and Figure 5 respectively.
With the above as background, this study attempts to investigate the relationship between ICT infrastructure and
economic growth in selected ASEAN countries. Although there is a growing body of studies that examine the
association between ICT and economic growth, there are not many studies specifically focused on ASEAN countries.
Moreover, this study employs the recent estimation technique of panel dynamic ordinary least squares (Panel
DOLS).
The structure of the paper is organized as follows. Section 2 provides a brief summary of previous studies on
relationships between ICT infrastructure and economic growth. Section 3 describes the data and the methodology
adopted in this study. Section 4 provides the discussion of results. The last section contains the concluding remarks.
2. Literature Review
Role of infrastructure in promoting growth has been supported by empirical literature. Among the early studies that
have highlighted the importance of physical infrastructure in economic growth are Aschauer, 1989a; Easterly and
Rebelo, 1993; and World Bank Report, 1994. The importance of infrastructure on productivity growth is reviewed in
the World Development Report 1994, which pointed out that the infrastructure may influence economic
development through its impacts on economic growth, poverty alleviation and environment. Countries with
adequate and efficient supply of infrastructure services would have higher productivity growth than countries with
lower and inefficient infrastructure services. However, the debate about the effects of infrastructure has started to
trigger only after the pioneering work of Aschauer (1989a) whose study based on the Cobb‐Douglas production
function framework, found a significant positive relationship between the stock of public infrastructure capital and
growth for U.S. economy. Though he has made a contribution in drawing attention to the importance of public
capital to economic growth, the findings has been questioned. Among those who criticise his findings were
Jorgensen (1991), Holtz‐Eakin (1994), Cashin (1995) and Baltagi and Pinnoi (1995). Some attribute this disparity due
to unit roots and spurious correlation (Jorgensen, 1991), endogeneity of public capital (Cashin, 1995) and
measurement errors in the public capital proxies (Baltagi and Pinnoi, 1995).
There is a growing body of evidence linking ICT infrastructure to economic growth. Among the earliest studies are
those of Jipp (1963), Bee and Gilling (1967) and Hardy (1980). Jipp (1963) found a positive relationship between the
income of a nation and telephone density. Bee and Gilling (1967) studied the relationship between telephone
facilities and their use and economic performance using data from 29 countries at different stages of development.
Hardy (1980) examines the impact of telecom penetration on growth. The results only show the significance impact
of the telephone but not the radio. Another study is done by Norton (1992), of which the study is based on a
sample of 47 developed and developing countries when he examines the influence of telephone infrastructure on
growth rates. The framework of the study duplicates the work of Kormendi and Meguire (1985). In addition to the
inclusion of more macroeconomic variables, the study also include two measures of telecommunication
infrastructure which are telephone density in 1957 and the mean telephone density over the time period of the
sample. In tackling the issue of reverse causality, he includes the initial‐year value of the stock of telephones in the
cross‐section model. He finds that the two measures of telecom infrastructure have a positive and significant impact
on mean growth rates. A study by Jorgenson (2001) using US data found that an increase in the US economic growth
is attributed by an investment in information technology (IT).
Madden and Savage (2000) investigates the effect of telecommunications on the level and growth of GDP for a
cross‐section of 43 countries over the period 1975 to 1990. The study uses OLS and instrumental variables
estimation to control for the possible endogeneity between telecom capital and GDP. Their result shows that there
is large effect of telecommunications capital on the level of GDP. Röller and Waverman (2001) explicitly model and
estimate the impact of telecommunications infrastructure on economic growth across 21 OECD economies, taking
into account the two‐way causation between them by using simultaneous approach. The finding reveals
telecommunications contribute about 33% of growth in the OECD countries. By using framework of Roller and
Waverman’s (2001), Sridhar and Sridhar (2007) estimate a system of equations that endogenizes economic growth
and telecom penetration and adding another mobile phone variable to the model. The estimation is done separately
to see the impact of each variable. The results provide evidence that cellular services contribute significantly to
national output. Following the work of Roller and Waverman (2001) with some modifications, Waverman, Meschi,
and Fuss (2005) find that mobiles telephony find that mobile telephony has a positive and significant impact on
economic growth in developing countries.
The empirical literature on the impact of telecommunication on economic growth have provided evident of how the
magnitude of the impact vary according to the degree of development of the countries. For instance, Hardy (1980)
uses a sample of 45 countries observes that telephones and GDP per capita are positively and significantly related.
However, the impact is found to be comparatively bigger in the least developed countries than the most‐developed
countries. Schreyer (2000) conducts a study on the G‐7 countries found that information technology has a
significant impact to the productivity growth for all the countries studied. Likewise, the result shows that the
magnitudes of the impacts are different across countries. Similarly, Pohjola (2001) in his study on 39 countries of
OECD and developing countries over the period of 1990 to 1995, noted that information technology investment
records a higher gross returns (80%) for OECD countries as compared to that of developing countries. As other
studies, Waverman, Meschi, and Fuss (2005) also find that the impact of mobile phones in developing countries is
greater than the impact in developed countries.
Instead of concentrating on developed and developing countries, there are also studies that specifically focused on
specific region such as Asia. For instance, a study by Seo and Lee, (2000) for Korea revealed a significant contribution
from ICT investment and this finding is supported by Kraemer and Dedrick (1994) when using data based on 12 Asia‐
Pacific countries for the year 1984 to 1990. Despite large number of empirical studies on ICT infrastructure and its
effects on growth, there have been few studies specifically focused on ASEAN countries. In particular, this study
analyses the impact of fixed and mobile phone penetration and number of internet users on economic growth in
selected ASEAN countries
3. Data and Methodology
3.1 Data
In this study, we employ annual data from 1980 to 2009 for the five selected ASEAN countries. These countries are
Indonesia, Malaysia, Thailand, Singapore and Philippines. The inclusion of countries and length of study period are
determined by the availability of data for all variables required for the analysis. All variables, except population
growth, are in natural logarithms and are generated from the World Development Indicator (WDI) World Bank
online database.
3.2 Model Specification
The following economic model is formulated in order to analyze the impact of ICT infrastructure on economic
growth.
RGDP = f (LRGDP, SOI, POP, OP, FM)
Where RGDP is GDP per capita (constant 2000 US$), LRGDP is lag of real GDP per capita, SOI is physical capital as
measured by share of investment, POP is population growth, OP is trade openness and FM is the fixed line mobile
phone subscribers.
The dependent variable used in the model, RGDP, is measured as GDP per capita (constant 2000 US$). Standard
control variables include population growth and physical capital as share of investment. Additional variables are also
included in the study such as lag of real GDP per capita to describe the dynamic relationship and variable trade
openness (real value of exports and imports as percentage of GDP). The indicator used to represent ICT
infrastructure is fixed line and mobile phone subscribers where the data are presented per 100 people. In addition,
two other indicators for ICT infrastructure are also tested which are mobile cellular subscriptions (per 100 people)
and internet users (per 100 people). From economic model (4.1), we can derive the econometric model expressed
as a linear‐log regression as follows:
= + + + + + (1.1)
where i = 1,2,…..,5 represents five ASEAN countries; Indonesia, Malaysia, Philippines, Thailand and Singapore,
subscript t denotes time series between 1980 – 2009.
This model is a dynamic panel data approach since we include a lagged dependent variable on the right ‐hand side
of the equation.
3.3 Econometric Approach
This study applied panel unit root tests as opposed to traditional unit root test, such as augmented Dickey_Fuller
(ADF). The main reason for applying panel unit root tests and not the traditional unit root tests is that the former
may increase test power from additional information provided by the pooled cross‐section time series. As a
preliminary step to the analysis, this test is required in order to determine the order of integration of the variables.
In this study, we use one of the most widely used unit root test proposed by Im, Pesaran and Shin (2003, hereinafter
IPS). This test is less restrictive and more powerful compared to the tests developed by Levin et al. (2002) and
Breitung (2000); which don’t allow for heterogeneity in the autoregressive coefficient. The test proposed by IPS
solves Levin and Lin’s serial correlation problem by assuming heterogeneity between units in a dynamic panel
framework. IPS test specifies an Augmented Dickey‐Fuller (ADF) regression with an individual intercept and a time
trend for each cross section as follows:
∆ = + , +∑ ∅ ∆ , + ; i = 1, 2, …….N; t = 1, 2, ……, T. (1.2)
where is a selected variable in country i and year, is the individual fixed effect and p is selected to make the
residuals uncorrelated over time. The null hypothesis is that = 0 for all i versus the alternative hypothesis is that
< 0 for some i = 1, 2, ….N1 and = 0 for i = N1+1, ……., N. The IPS statistic is based on averaging individual
Augmented Dickey‐Fuller (ADF) statistics to produce a standardized test and can be written as follows:
̅= ∑
where is the ADF t-statistic for country i based on the country‐specific ADF regression, as in (1.2). The t statistic
has been shown to be normally distributed under 0 H and the critical values for given values of N and T are provided
in Im et al. (2003).
As a next step, we conduct panel cointegration test once the order of cointegration has been identified. In this
study, we use the panel cointegration tests advocated by Westerlund (2007). The Westerlund (2007) tests avoid the
problem of common factor restriction. The null hypothesis is that the variables are not cointegrated. The null is
tested by inferring whether the error correction term in a conditional error correction model is equal to zero. If the
null of no error correction is rejected, then this means that the null hypothesis of no cointegration is also rejected.
Westerlund (2007) proposed four different statistics to test panel cointegration, based on least squares estimates of
and its t‐ratio. The statistics can be grouped into two: panel statistics and group mean statistics. Panel statistics
are based on pooling the information regarding the error correction along the cross‐sectional dimension of the
panel whereas the group mean statistics do not exploit this information. While two of the four tests are panel tests
with the alternative hypothesis that the whole panel is cointegrated ( H1 : = < 0 for all i ), the other two tests
are group‐mean tests which test against the alternative hypothesis that for at least one cross‐section unit there is
evidence of cointegration ( H1 : = < 0 for at least one i ). The panel statistics denoted and test the null
hypothesis of no cointegration against the simultaneous alternative that the panel is cointegrated, whereas the
group mean statistics and test the null hypothesis of no cointegration against the alternative that at least one
element in the panel is cointegrated. One advantage of using Westerlund’s (2007) panel cointegration tests is that
the time series are allowed to be unequal length.
The last step is to estimate the long‐run relationships using panel dynamic ordinary least squares (DOLS) estimator.
DOLS procedure was developed by Saikkonen (1991) and generalized by Stock and Watson (1993). DOLS is a single
equation cointegration technique that overcome the common problems of the static and modified OLS. The static
OLS finite sample estimates of long‐run relationships are potentially biased and inferences cannot be drawn using t‐
statistics (Banerjee et al, 1986, Kremers et al, 1992). Panel DOLS (PDOLS) has been analyzed by Kao and Chiang
(2000) and Mark and Sul (2003). Kao and Chiang (2000) study the properties of panel DOLS when there are fixed
effects in the cointegration regressions. Mark and Sul (2003) allow for individual heterogeneity through different
short‐run dynamics, individual‐specific fixed effects and individual‐specific time trends. They also permit a limited
degree of cross‐sectional dependence through the presence of time‐specific effects. The DOLS estimator corrects
standard OLS for bias induced by endogeneity and serial correlation. First, the endogenous variable in each equation
is regressed on the leads and lags of the first differenced of right–hand side variables from all equations to control
for potential effect of the endogeneity of these variables. Therefore, it is possible to construct asymptotically valid
test statistics and also to estimate the long‐run relationships. The DOLS estimator is preferred to the non‐parametric
FMOLS estimator because of its better performance.
4. Results and Discussions
4.1 Panel Unit Root and Panel Cointegration Tests
Before progressing with the cointegration analysis of the panel data, we conduct a panel unit root test first. In doing
so, we adopt the method proposed by Im, Pesaran and Shin (2003) which is better known as IPS. Table 1 below
shows the statistics from the panel unit root tests. The test statistics suggest that all variables are nonstationary at
level. But at first‐difference, all variables are stationary as all panel unit root tests reject the null of nonstationarity
for the first‐differenced variables at the 1% level of significance. Thus we can conclude that panel variables are
integrated of order one, I(1).
Table 1: IPS Panel Unit Root Test
Variables Level First difference
lrgdpc ‐1.0190 ‐3.7740***
lrgdp(‐2) ‐0.5962 ‐3.9394***
pop ‐2.0548 ‐3.0017***
lse ‐1.2682 ‐3.9045***
lsoi ‐1.2604 ‐3.4868***
lop ‐1.9632 ‐4.3162***
lfm 2.8210 ‐3.3742***
All variables, except population, are in natural log form; ***, ** and * indicate statistical significant at 1, 5 and 10%
level of significance respectively.
4.2 Panel Cointegration Test
The concept of cointegration was first introduced by Granger (1981) and developed further by Engle and Granger
(1987) and Phillips and Ouliaris (1990), among others. Similar to panel unit root tests, extension of time series
cointegration tests to panel data is also recent. Panel cointegration tests that have been proposed so far can be
divided into two groups: the first group of tests takes cointegration as the null hypothesis (e.g. McCoskey and Kao,
1998) while the other group of tests takes no cointegration as the null hypothesis (Pedroni, 1999; Kao, 1999).
Having found that all variables are in stationary position after first difference and are cointegrated of order one,
which is I(1), next step is to apply cointegration test using the first‐differenced variables. The cointegration test is
carried out to test for the presence of long‐run relationships among integrated variables. For this purpose, four
error‐correction‐based panel cointegration tests proposed by Westerlund (2007) is chosen. Westerlund (2007) test
allows us to test the presence of cointegration among cointegrated variables. The tests are based on structural
dynamics rather than residuals and thus no common factor restriction is imposed. The test takes no cointegration as
the null hypothesis. Table 2 below report the panel cointegration results. In order to choose optimal lag and lead
lengths for each series, we use the AIC criterion and the Bartlett kernel window width is set according to
4(T/100)2/9 ≈ 3.
Table 2 summarizes the result of Westerlund’s cointegration tests. For testing the existence of long run relationship
between fixed line and mobile phone subscription, all test statistics reject the null of no cointegration at the 10%
level, two of the tests are able to reject the null at the 5% level and 1 test reject the null at 1%. Results from the
tests suggest that cointegration relationship exists in the series and is expected to move together in the long run.
Table 2: Westerlund (2007) Panel Cointegration Test
Stat Z‐value p‐value
‐3.232 ‐2.182 0.015
‐18.345 ‐1.938 0.026
‐5.380 ‐1.345 0.089
‐19.347 ‐3.480 0.000

G_τ and G_α are group mean statistics that test the null of no cointegration for the whole panel against the alternative of cointegration for
some countries in the panel. P_τ and P_α are the panel statistics that test the null of no cointegration against the alternative of cointegration
for the panel as a whole.
4.3 Panel Dynamic OLS
Table 3 provides the regression results of panel DOLS tests. Initially, Equation (1.1) is estimated by using two‐years
lags and one‐year lead (DOLS (2,1)). In addition, a specification based on different set of lags and leads, which is by
using three‐years lags and one‐year lead (DOLS (3,1) is also tested. Based on the regression results, the coefficient of
the lagged real GDP per capita (lrgdp(‐2)) is positive and highly significant. Another core variable, which is share of
investment, also has a strong positive and significant effect on growth, as proven in past literatures of the
importance of capital accumulation in ASEAN countries. The results also show that population growth and openness
have no significant impact on the real GDP per capita.
With regards to the coefficient of the telecommunication variables, which is fixed line and mobile phone
subscriptions per 100 inhabitants, based on a sample of five countries, the variable is found to be positively and
statistically significant at 1% significance level. This result provides an indication of a strong impact of the
telecommunication infrastructure in influencing ASEAN growth. The estimated coefficient implies that for 10%
increase in the number of fixed and mobile subscriptions per 100 inhabitant, real GDP per capita increases by 0.23%.
However, the estimated coefficient is higher when using three leads and one lag. This positive and significant result
supports the results of previous studies regarding the positive impact of telecommunication on growth such as
Madden and Savage (1998); Röller and Waverman (2001); Waverman, Meschi and Fuss (2005) and Sridhar and
Sridhar (2007).
For robustness check, we also include two additional variables which are mobile cellular subscriptions and internet.
However, the length of study period is shortened to accommodate the availability of data for all variables required
and this has resulted Philippines to be dropped from the analysis. Both mobile cellular and internet are found to be
significant at 1% significance level in both cases. However, when the regression is done by using two leads and one
lag, only internet remains highly significant while mobile cellular is significant at 10% significance level.
Table 3: The Impact of ICT Infrastructure on Economic Growth
Model 1 Model 2
DOLS (2,1) DOLS (2,1) DOLS (2,1) DOLS (3,1) DOLS (3,1) DOLS (3,1)
lrgdp2 0.948*** 0.965*** 0.968*** 0.972*** 0.977*** 0.974***

(28.77) (16.86) (14.96) (11.14) (13.46) (13.46)
pop 0.003 0.002 ‐0.001 0.002 0.003 ‐0.006

(5.43169) (0.28) (‐0.14) (0.24) (0.38) (‐0.71)
lsoi 0.100 *** 0.143*** 0.205*** 0.081** 0.065** 0.164***

(4.81) (5.57) (5.87) (2.24) (1.96) (4.30)
lop 0.007 ‐0.001 ‐0.044 ‐0.047 ‐0.024 ‐0.050

(4.81) (‐0.01) (‐0.72) (‐0.65) (‐0.37) (‐0.75)
lfm 0.023*** 0.070***

(2.61) (4.42)
lmc 0.010* 0.055***

(1.38) (7.08)
liu 0.027*** 0.032***

(5.27) (5.85)
No. of .obs 150 88 64 150 88 64
Adj R‐squared 0.9913 0.9665 0.9665 0.9869 0.9498 0.9498
Wald chi2(5) 1949.89 1291.59 1291.59 518.32 497.86 497.86
Notes: All variables except population growth, are expressed in natural logarithms. t‐statistics in brackets; * significant at 10%; ** significant
at 5%; *** significant at 1%. Leads and lags selected according to AIC.
5. Conclusion
This study investigates the impact of ICT infrastructure on economic growth in selected ASEAN countries for span
period 1980‐2009. This study specifically examines the effect of ICT infrastructure on economic growth in the case of
five ASEAN countries i.e. Indonesia, Malaysia, Thailand, Singapore and Philippines. We find significant effects of all
ICT infrastructure variables which are captured by number of fixed and mobile phone subscriptions, mobile cellular
and internet on economic growth. This study employs a recent technique of panel dynamic OLS and the issue of
endogeneity is addressed with the inclusion of leads and lags. The findings of this study provide evident on the
important role of ICT as a tool to accelerate economic growth in ASEAN countries. Hence, more efforts should be
geared towards encouraging and improving ICT sector. From the perspective of policy makers, the results suggest
that having sufficient and efficient telecommunication infrastructure is essential for fostering economic growth
particularly for other ASEAN countries such as Cambodia, Laos and Myanmar (CLMVs) whose ICT infrastructure are
still lagging far behind.
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APPENDIX
Figure 1:Fixed telephone subscriptions per 100 inhabitants

60
Number of subscriber per 100 inhabitant
Brunei Darussalam
50
Cambodia
40 Indonesia
Lao P.D.R.
30
Malaysia
20 Myanmar
Philippines
10 Singapore
Thailand
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Viet Nam
Source: International Telecommunication Union (ITU) 2011
Figure 2: Mobile Cellular Subscriptions per 100 Inhabitants

200
180 Brunei Darussalam
Number of subscribers per 100
160 Cambodia
140 Indonesia
inhabitant
120 Lao P.D.R.

100
Malaysia
80
Myanmar
60
40 Philippines
20 Singapore
0 Thailand
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Figure 3: Percentage of Individuals Using Internet

80
Brunei Darussalam
70
Cambodia
60
Indonesia
50
percentage
Lao P.D.R.
40
Malaysia
30
Myanmar
20 Philippines
10 Singapore
0 Thailand
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Figure 4: Fixed Internet subscriptions per 100 inhabitants

60
Number of Subscriber per 100
50 Brunei Darussalam
Cambodia
40
Indonesia
inhabitants
30 Lao P.D.R.
Malaysia
20
Philippines
10 Singapore
Viet Nam
0
2000 2001 2002 2003 2004 2005 2006 2007 2008

Figure 5: Fixed broadband subscriptions per 100 inhabitants

30
Brunei Darussalam
Number of subscriber per 100
25 Cambodia
20 Indonesia
inhabitants
Lao P.D.R.
15
Malaysia
10 Myanmar
Philippines
5
Singapore
0 Thailand
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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ICT INFRASTRUCTURE AND ECONOMIC GROWTH: EVIDENCE FROM ASEAN-5

Jamilah Mohd Mahyideen Normaz WANA Ismail

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ICT INFRASTRUCTURE AND ECONOMIC GROWTH: EVIDENCE FROM ASEAN-5 USING

Normaz Wana Ismail, PhD*

Field of Research: ICT Infrastructure, economic growth, panel data.

3. Data and Methodology

3.2 Model Specification

RGDP = f (LRGDP, SOI, POP, OP, FM)

3.3 Econometric Approach

4. Results and Discussions

4.1 Panel Unit Root and Panel Cointegration Tests

Table 1: IPS Panel Unit Root Test

Variables Level First difference

lrgdpc ‐1.0190 ‐3.7740***

lrgdp(‐2) ‐0.5962 ‐3.9394***

pop ‐2.0548 ‐3.0017***

lse ‐1.2682 ‐3.9045***

lsoi ‐1.2604 ‐3.4868***

lop ‐1.9632 ‐4.3162***

lfm 2.8210 ‐3.3742***

4.2 Panel Cointegration Test

Table 2: Westerlund (2007) Panel Cointegration Test

Stat Z‐value p‐value

‐3.232 ‐2.182 0.015

‐18.345 ‐1.938 0.026

‐5.380 ‐1.345 0.089

‐19.347 ‐3.480 0.000

4.3 Panel Dynamic OLS

Table 3: The Impact of ICT Infrastructure on Economic Growth

lrgdp2 0.948*** 0.965*** 0.968*** 0.972*** 0.977*** 0.974***

pop 0.003 0.002 ‐0.001 0.002 0.003 ‐0.006

lsoi 0.100 *** 0.143*** 0.205*** 0.081** 0.065** 0.164***

lop 0.007 ‐0.001 ‐0.044 ‐0.047 ‐0.024 ‐0.050

lfm 0.023*** 0.070***

lmc 0.010* 0.055***

liu 0.027*** 0.032***

No. of .obs 150 88 64 150 88 64

Adj R‐squared 0.9913 0.9665 0.9665 0.9869 0.9498 0.9498

Wald chi2(5) 1949.89 1291.59 1291.59 518.32 497.86 497.86

World Bank World Development Indicator (WDI), CD-ROM.

Figure 1:Fixed telephone subscriptions per 100 inhabitants

Source: International Telecommunication Union (ITU) 2011

Figure 2: Mobile Cellular Subscriptions per 100 Inhabitants

120 Lao P.D.R.

Source: International Telecommunication Union (ITU) 2011

Figure 3: Percentage of Individuals Using Internet

Source: International Telecommunication Union (ITU) 2011

Figure 4: Fixed Internet subscriptions per 100 inhabitants

Source: International Telecommunication Union (ITU) 2011

Figure 5: Fixed broadband subscriptions per 100 inhabitants

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lrgdp2 0.948* 0.965* 0.968* 0.972* 0.977* 0.974*

lsoi 0.100 * 0.143* 0.205* 0.081 0.065 0.164*

lfm 0.023* 0.070*

liu 0.027* 0.032*