Investigating the direct and indirect effects of Information and Communication Technology on economic growth in the emerging economies: role of financial development, foreign direct investment, innovation, and institutional quality

The growing demand for digitalization in different economic sectors has garnered considerable attention from researchers to explore the effects of Information and Communication Technology (ICT) on economic growth. In this study, we explore the direct and indirect effects of ICT on economic growth, through its interaction with institutional quality, financial development, research and development (R & D) expenditures, and foreign direct investment (FDI), for 13 emerging economies from 2000 to 2020. We find that ICT use has a significantly positive effect on economic growth. It is found that the interaction effects of ICT with financial development and R & D expenditures are favorable to economic growth, whereas ICT does not act synergistically with institutional quality and FDI. This implies that the emerging economies should increase R & D expenditures on ICT services and increase digitalization of the financial sector, along with advancing their ICT infrastructure, strengthening the institutional quality, and encouraging more FDI inflows to maintain their growth momentum.