The dynamics of ICT, foreign direct investment, globalization and economic growth: Panel estimation robust to heterogeneity and cross-sectional dependence

In the modern era of globalization, information and communication technology (ICT) are considered key sectors that profoundly contribute to economic growth. Most of the economic activities, trade, and foreign direct investment are mainly dependent on modem sources of ICT. The objective of present research work is to investigate the dynamic relationship between ICT, foreign direct investment (FDI), economic growth incorporating trade and globalization for BRICS economies over 2000-2014 by employing OLS with fixed effects, the FMOLS, the DOLS and the group-mean estimator techniques robust to heterogeneity and cross-sectional dependence. Empirical results of the study suggest the long-run elasticities between ICT and economic growth, which suggests that ICT positively contributes to economic growth. Findings from long-run output elasticities show that both FDI and globalization have a long-run effect on economic growth. Furthermore, bi-directional causality exists between GDP and FDI, globalization and economic growth, and trade and economic growth. Also, unidirectional causality is running from globalization to trade. Globalization and ICT also Granger causes each other. Sensitivity analysis is employed to check whether findings of the study are valid and reliable for policy recommendation. The outcome of our study suggests policy recommendations for improving ICT with the focus on economic growth, trade openness and facilitation of foreign investment in BRICS countries.