ICT Penetration and Economic Growth in Developing Asia: Issues and Policy Implications

SCID Working Paper 307





This paper provides a global view on the diffusion of ICT and its contribution to economic growth in Asia. The findings reveal that the “digital divide” challenge is magnified in Asia: there is a clear divergence trend on the diffusion of personal computers among the Asian developing countries. China has been among the leading performers while India remains a laggard in ICT diffusion. The contribution of investment in ICT to economic growth is much more significant for China than India in both magnitude and share in total output growth. The paper also points out that per capita income, openness, and education are the key factors underlying variation in the pace of ICT penetration across countries and the effect of the education factor has significantly accelerated since 1996. Furthermore, the effectiveness of the ICT agenda and efficiency of the ICT market also has a strong impact on the diffusion of ICT in a country. This model well explains why the pace of ICT penetration has been much slower in India relative to China over the past 10-15 years.