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The Effect of Internet on Economic Growth : Focusing the Interaction with Government Size
and Quality
The Effect of Internet on Economic Growth : Focusing the Interaction with Government Size
and Quality
Jae Young Woo
2. 목 차
1. Introduction1. Introduction
2. Literature Review2. Literature Review
3.Experimental Methodology 3.Experimental Methodology
4 Empirical Results4 Empirical Results
5. Conclusion 5. Conclusion
ReferencesReferences
3
Background The Internet become the public sphere It plays a pivot role as a platform for
ideas, innovation, connection, and economic growth
However some previous studies that analyzed the relationship between Internet and growth did not consider the role of government size and quality
4
Purpose of Study to explore economic growth theory and
to estimate the question of how Internet which speeded the diffusion of information and knowledge underpins the economic growth process
and how it interact with two dimensions of the government's size dimension as measured by government share and quality dimension as measured by Gini
5
Methods and Data the panel regression model using 30
OECD country panel data, over the period 1990 – 2007
6
Differences to the previous research estimated in two different ways; the
Internet usage ratio and growth rate of Internet usage ratio
analyzed the time lag effects of main IV variables
use panel data techniques including fixed effect model and system GMM to control for unobservable country specific effects, and to tackle the endogeneity issue
Frame work of research
7
Variables Definition and Sources
8
Variabl
e Definition Source
Expected
sign
Dependent
variablesGrowth
growth rate of Real GDP Chain per
capita (RGDPCH) PWT6.3
Independent
variables
Internetratio of the Internet users to per
100 people(0 to 100 scale)World Bank +
GInternetgrowth rate of Internet user ratio
to per 100 peopleWorld Bank +
Kg
Government share of Real GDP
per
capita (RGDPL)
PWT6.3 +/-
Gini Gini Index(0 to 1 scale)WDI
LIS+/-
9
Model Specification
10
Three Relationship Model
11
Three Relationship Model
Government Share or Quality(Gini Index)
Government Share or Quality(Gini Index)
Linear Degressive Non-linear Inverted U-curve
Linear Degressive Non-linear Inverted U-curve
12
Descriptive statistics for the OECD
Variables N Mean S.D Min Max
grgdpch 540 2.32 3.20 -19.22 11.63
Internet 540 24.25 26.30 0.01 88.89
Kg 540 14.81 4.56 6.20 32.17
Gini 540 0.24 0.07 0.13 0.44
Inflation 540 7.18 26.67 -13.85 555.38
GDP 540 24,594 10,489 5326 74,366
GrPOP 540 0.57 0.51 -0.38 1.93
Ki 540 28.68 5.67 13.09 53.58
HDI100 540 91.15 4.92 70.00 97.10
13
Pearson Correlation Matrix
Note) ***, **, * indicate coefficient estimates are statistically significant at 1%, 5%, 10% levels, respectively.Note) ***, **, * indicate coefficient estimates are statistically significant at 1%, 5%, 10% levels, respectively.
Variables
grgdpch
Internet
Kg GiniInflatio
nGDPt-1 GrPOP Ki HDI100
grgdpch
1.00
0.114*** 1.00
-0.156***
-0.171***
1.00
0.088** -0.091**-
0.344***1.00
-0.226***
-0.161***
0.152*** 0.168*** 1.00
0.011 0.482***-
0.514***-
0.335***-
0.278***1.00
0.008 -0.094**
-0.385***
0.497*** 0.125*** 0.122*** 1.00
0.280*** 0.202***-
0.462***0.100**
-0.164***
0.182*** 0.007 1.00
0.033 0.433***-
0.349***-
0.369***-
0.359***0.700*** -0.108** 0.168*** 1.00
14
Current Kg Current Gini
15
Current Internet Usage Rate and Kg
16
Fixed Effects of Country and Year
17
Time lagged Growth rate of Internet Usage and Kg
18
Time lagged Internet Usage Rate and Kg
19
Time lagged Internet Usage Rate and Gini
20
System GMM Analysis
21
Partial Effects of Interaction
22
Summary of Theory Internet diffusion affects growth at the microeconomic
level through increased competition, fostering new role of the customer, economies of supply side and demand side scale, transparency and cost reduction
Internet diffusion enhances the economy at the macroeconomic level through the appearance of a new economy and increased trade
Internet diffusion reduces corruption and costs, and invigorate Internet governance and hence raises the level of quality of decision-making of government and firms, which improves the efficiency and effectiveness of resource allocations and human rights conditions
23
Summary Internet diffusion affects growth at the microeconomic
level through increased competition, fostering new role of the customer, economies of supply side and demand side scale, transparency and cost reduction
Internet diffusion enhances the economy at the macroeconomic level through the appearance of a new economy and increased trade
Internet diffusion reduces corruption and costs, and invigorate Internet governance and hence raises the level of quality of decision-making of government and firms, which improves the efficiency and effectiveness of resource allocations and human rights conditions
24
Implications The elimination of the major barriers for people
to use ICTs, such as the lack of accessibility and the low levels of knowledge and skills in using new technologies.
It is pre-condition making good Internet governance which realizes the social truth and enables virtuous circle through increasing monitoring and participation for active feedback.
The positive impact of Internet on growth will be reinforced by the income redistribution policy.