It is crystal clear that information and communication technology (ICT) has been contributing a lot to economic growth. There has been an invaluable relationship between ICT and economic growth in developing countries like ours since the latter’s discovery.
Recognizing the immense contribution of ICT to economic progress, The Ethiopian Herald recently approached Solomon Shiferaw, an economist graduated from Addis Ababa University and IT expert, too, to gather information about the correlation between ICT and economic growth. He said, “ICT is a dynamic area for investment and it includes ICT infrastructure, interpersonal communication, knowledge creation systems, infrastructure and support services for electronic commerce applications and others that can advance a country’s digital economy and consequently growth and development.”
He further said that the Information Communication Technology has, for instance, emphasized the role of ICT in protecting the environment without any sacrifice in economic output. Similarly, the Ethiopian government also relies strongly on ICT, not only to provide the economy with market competitiveness through technical innovation and global entrepreneurship, but also to enable transport, buildings, and industry to reduce their energy consumption.
He further said that for the ICT-growth nexus, a neoclassical aggregate production function including energy consumption and ICT investment need to be given due emphasis. For the ICT–energy nexus, a conventional energy demand function has to be developed and the government has emphasized the importance of introducing policies and institutions to stimulate additional investment in ICT.
“The ICT investment can also actually lead to a win–win lower energy use-economic growth situation, and investment on ICT is an absolute good for society as it helps boost economic growth. The relationship between ICT and economic growth can be measured with the rate of development of digital economy. As a consequence, the effect of Information and Communication Technologies becomes a support for the economic growth of many developing and developed countries,” he said.
As to him, it is advisable to take into account the impact of ICT on economic growth. Besides, e-governance and e-commerce are important sources of economic growth as theimportance of ICT in the context of strategy for economic development of the country.
The importance of knowledge, innovation and ongoing technological changes linked to the advent of information and communication technologies (ICT) have engendered intense public discussions over the past few years. In particular, there is increasing awareness of the fact that these elements strongly determine the way of economic development and social progress across the nation, he opined.
He also said that regarding the growing importance of ICT and the way it is transforming the country, many academicians and researchers have focused on cramming the impact of ICT on economic growth at the industry level, at the national level, and at the cross-country level.
He said that it is very important since it has been proven that new technologies positively and strongly influence economic growth by accelerating the development and adoption of innovation processes and fostering competition.
Solomon said that in the modern economic perspective, information and communication technology is seen as an important production factor by reason of knowledge-driven economy. A range of knowledge, innovation and technological changes become important factor for economic growth. The importance of ICT knowledge for economic growth is witnessed invaluable. Depending on this, investing on information and communication technology becomes more important.
According to him, the main purpose of intensifying ICT is to foster economic growth across Ethiopia. True, information and communication technologies are of paramount importance in bolstering economic growth.
He said, “The impact of information and communication technology on main sectors that effects growth is immense, indeed! This will provide a better understanding of impacts of information and communication technology on economic growth and ICT-sensitive sectors that effect economic growth for the country. Technology boosts economic growth especially through ICT sensitive sectors.”
As to Solomon, the ICT revolution had caused concrete and serious changes on the real economy. In particular, it created a huge goods and services economy with strong forward and backwards linkages. A faster and better speed of technological change and product improvement is now widely witnessed. Besides, technological innovation in the ICT sector has important macro-economic consequences.
Development in ICT may affect not only economic growth but employment as well, and economic growth and employment may affect ICT development. ICT development may positively affect productivity and growth, which will eventually lead to a higher employment, as such economic growth will positively affect labor market. The two important channels by which ICT can have real effects on real economy: production of ICT and the use of ICT. Firstly, the ICT sector itself become an important industry at global level coincided with the growth of the service industries and ICT revolution has contributed significantly to the whole economy by rising productivity.
The overall move for the development of ICT is really paying off as the technology has been helping nations come up with better production and productivity, he opined. In the modern era of globalization, information and communication technology (ICT) is the main sector that stimulates economic development.
It also enables technical developments in global communication, manufacturing techniques, and contributes a lot to the economic growth and sustainable growth. Many economic activities, including international trade and foreign direct investment (FDI), primarily depend on various modern ICT approaches and feasible economic development. The dynamic relationship between FDI, ICT, international trade, and economic growth is indispensible in Ethiopia.
“Information and communication technology (ICT), population growth, gross capital formation, openness and inflation are frequently well-thought out as important drivers of economic growth in all countries especially for developing ones such as Ethiopia. The importance of information and communication technologies (ICTs) in economic and social development arisen dramatically with high impressing position since the starting of rapid growth of these technologies and their market nationally, regionally and even globally.”
Solomon said the important role of ICT is enabling the government and organizations to transform information into knowledge as a robust driver in evolving lasting change in the economy and society. The contributing role of ICT is not limited to real economic growth; the enormous infrastructure development related to ICT and other macro and micro upshot can also control the socio-economic and environmental situation.
As to Solomon, primarily, technological infrastructure based on ICT improves utilization of energy consumption, while collecting, installation of machineries, and distribution of these machines and equipment to come up with production suitable to ecological system.
He said, “The information communication has developed rapidly in recent years, and the continuous spread of information communication drives development of the internet, helps financial institutions provide diversified financial services, makes people more willing to accept income, and promotes the continuous optimization of developmental services.”
Information communication can significantly affect economic development and provide the public with efficient services thereby augmenting economic development and technological innovation as well as financial products and services. Yes, he said the impact of information communication on financial and economic development has heterogeneous characteristics, including regional heterogeneity and heterogeneity in foreign investment levels.
Solomon further stated that Information and Communication Technology (ICT) plays a pertinent role in bolstering economic growth and development of Ethiopia. True, Ethiopia is a country of more than 120 total populations. So, from the development point of view, it has been the main focus of the government to provide all citizens with developed economic strata via providing better services of infrastructure, agricultural development, financial services and public health services etc. to the rural area of the nation.
All the decisions whether political, social, economic, cultural or behavioral today depends on the ability to access, gather, analyze and utilize information and knowledge with a view to reinvigorating economic development across the nation.
In a nutshell, exploring the ICT growth nexus in the framework of digital economy and innovation as a driver of economic growth across Ethiopia and the horn region needs to attract due attention. Yes, as national investment rate is important to promote economic growth, it has to be well backed by digital system, and it found that ICT has been making significant contribution to economic advancement.
BY MENGESHA AMARE
THE ETHIOPIAN HERALD FRIDAY 1 SEPTEMBER 2023
