Impact of ICT, Financial Development and Trade on Economic Growth: A Panel Data Analysis of Asian Countries

Abstract

This study presents a comprehensive panel data analysis investigating the effect of Information and Communication Technology (ICT), financial development, and trade on economic growth in Asian countries from 2000 to 2019. From a regional perspective, the study explores the individual and interactive effects of these variables across various subregions by utilizing static as well as dynamic panel data approaches. The study findings reveal that ICT and financial development individually show a statistically significant and positive impact on economic growth across the full sample of Asian countries. However, this impact exhibits variations when examined at the subregional level, indicating the effect of region-specific factors. In contrast, trade's impact on economic growth is found to be non-significant for the full sample, but variations exist across subregions, highlighting the diverse trade dynamics within Asia. To explore the impact of trade in more depth, exports and imports are used as proxy variables. The findings demonstrate that exports display a statistically significant positive effect on economic growth, confirming the concept of export-led growth in the region. On the other hand, imports exhibit a negative and significant effect across the full sample and subregions, underscoring the importance of a balanced trade strategy. Moreover, the study shows a positive interactive effect of ICT, financial development, and trade across full sample and subregions. The significance of this interaction, however, varies across subregions. This research study enhances our knowledge of the diverse impacts of ICT, financial development, and trade on economic growth in Asia. The highlighted potential for growth in the region emphasizes the need for targeted policies like investing in digital infrastructure, fostering financial development, and facilitating trade.