ICT and socio-economic development: Evidence from a spatial panel data analysis in China

Over recent decades, information and communication technology (ICT) has had a profound impact on the economy and on society more broadly. The purpose of this study was to explore the effects of ICT on socio-economic development in China by considering spatial effects. To understand the overall influence of ICT on socio-economic development, the study used principal component analysis (PCA) to establish composite ICT and socio-economic development indexes based on data collected from 31 provinces in the period 2009-2018. In applying the spatial panel data analysis, this article argues that a spatial Durbin model (SDM) with spatial fixed effects is the most suitable model for the purpose of making estimations. The results of the SDM suggest the socio-economic development of provinces contains strong spatial correlations. More specifically, although ICT plays an essential role in improving socio-economic development, the spatial spillover effects of ICT negatively affect the socio-economic development in adjacent areas, implying that a digital divide exists among China's provinces and that this digital gap can lead to unbalanced socio-economic development. The article concludes by outlining some practical policy recommendations for the advancement of ICT going forward to help alleviate the adverse effects of the digital divide and enhance the benefits of ICT-based socio-economic development.