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Impact of Information Technology on Economic Growth

RESEARCH PAPER “IMPACT OF INFORMATION TECHNOLOGY ON ECONOMIC GROWTH”

CERTIFICATE

This is confirmed that the exploration work contained in this anticipate has been concurred out by student. Under my organization for the complete satisfaction of the necessity for the degree of MBECon (Master of Business Economics) Department of Economics.

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Impact of Information Technology on Economic Growth           “I Know I am something Because Allah Almighty does not Create Garbage”

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Teachers Prof. & All others who’s exceptional guidance always turned to me on the right path.

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Acknowledgement

All the thanks and acclaim to ALLAH  the benevolent, the most lenient who helps us in the murkiness and challenges. I go to most conscious Allah for his course and benevolence for the duration of my life. All the appreciation and honor to HAZRAT MOHAMMAD (S.A.W) who is perpetually a light of heading and light of learning for humankind. This dissertation would not have been possible without the help and kindness of a number of people. I am very thankful to Professor.  Who provided us the chance to conduct this project. And whose kind support was always with us throughout the duration of the project.

I gratefully acknowledge my supervisor who gave me a chance to conduct this research and I feel great pleasure for her nice support and encouragement throughout the course of my research.

I like to acknowledge to all the faculty members of the DEPARTMENT OF ECONOMICS for educating and training us particularly for an inter-graded approach on the study of statistical & management concepts/their applications thereby producing blended post-graduate professionals for the present day challenges being faced by the organizations.

I would like to express my thankfulness to my parents, brothers, and also my cousin’s friends for their inspiration, love, encouragement and constant support.

Abstract:

This research work or study is conducting to approximation the numerical or empirical results to see the “impact of information communication technology on the economic growth” in the past years from “1975 to 2015” through either OLS technique or Co integration. In this study we take the dependent variables as a trade, GDP, Enrollment in education sectors, Mortality rate of males and females and fixed gross capital formation and the independent variable is the imports and exports of communication and computers items to see their impact on economy.

Introduction:

INFORMATION Technology is the use of any PCs, systems administration, stockpiling and other physical gadgets like all the information gadgets (mouse, consoles) Infrastructure and improvements to make process, secure, store and trade of all types of electric information. The data and innovation correspondence in quick up financial development has been experimentally perceived in the structure of numerous created economies. By utilizing the data correspondence innovation, firms minimize the expense of coordination, correspondence, essentially and build the profitability and proficiency also. Data correspondence innovation speculation which includes the two things. To begin with is physical capital which comprises of correspondence gear and equipment the second is elusive resources like programming, these both finances the monetary development specifically by better yield and the extension of commercial ventures that creates the ICT things and in a roundabout way by the nature of speculation and yield of businesses that utilization the ICT assets in efficiency. The financial development of Pakistan through earlier years has circumvented whatever other nation of similar monetary condition barring china. Pakistan economy is not steady but rather through last late years is going towards creating economies and there is much progression in the numerous segments of Pakistan economies by the utilization of cutting edge advancements and data innovation.

Liberalization of the Pakistan economy in the mid 1990s, to some level related with the broad ICT rebellion and nation has progressed from this rebellion, availability of talented developers and architects. In this manner the underlying up of economies in 2000, in the data correspondence Pakistan is a first entertainer innovation industry, in essentially the product segment, in giving the opening for work to chiefs, developers, and examiners. Programming uprising in Pakistan can be truly advanced the new businesses and much other progression in the product area. Obviously, the upgraded establishment will be diverted in the capability of programming industry, however it additionally plausible to have the impact on different divisions of the economy. As expressed over, the impact of data correspondence innovation on monetary development can portray through various systems, both immediate and backhanded. For instance, fast innovative change in the data correspondence innovation creating divisions. This event in the United States has hint imperative fall in the cost of data correspondence innovation products. This falling value essential to the substitution of different firms of capital through data correspondence innovation has solidifier’s favorable position better ability in building up their profitability. In this study we take the information on exchange, instruction (enlistments), health(mortality rate) ,GDP, gross altered capital development as needy variables and we takes free variable imports and sends out on correspondence and PC things, to see the effect of these correspondence things on monetary development (GDP).

We take the information on these our variables around 40 years to see the sort of vacillation and hole are existing. In Pakistan Information Technology is an emanant and developing industry. It has a large portion of possibilities. Substances in regards to the data innovation trade are directing and control by the “Service of data and television of the legislature of Pakistan”. This segment is thinking about as a fruitful part of Pakistan monetarily and fiscally too. The legislature of Pakistan has given a few advantages to the IT speculators in the nation through the most recent years. Amid the years 2003-2005 data innovation sends out an aggregate of 48.5 million USD “THE WORLD ECONOMIC FORUM“. Measuring the change of data and correspondence innovation in the nation ordered Pakistan eleventh among 144 nations in the worldwide. This was show in data innovation report of 2014. In 2011, Pakistan has more than 20 million clients and is delegated 1 of the top nation that has enrolled a high development rate in web infiltration, all things considered, it has a 27th greater populace of web clients on the planet. While at the early stage, the lessening costs of IICT stocks have brought about add to of data correspondence innovation generally in United States and huge numbers of European nations. (Van ark at al . 2013. Van ark, trimmer 2008).

The reception and stream rate were low in the large portions of sprouting economies. In any case, this propensity has been changing as the mid-2000s, through which a considerable measure of rising economies likewise in advancement digitally. So far in our basic discerning of the effect of ICT on aggregate financial execution in rising economies is outrageously fractional, predominantly because of the absence of appropriate information. A special case of this is De Vies, Molder, Dal Bargo and Hofman 2010 For the situation of latin America and Jorgenson and Vu 2005, 2011 and 2013. In a more worldwide circumstance, this absence of information has a further test of building up a progression of ICT speculation for Pakistan economy. This concentrate additionally takes a database on exchange Pakistan. Data innovation and telecom businesses have bridled limited advantage for the Pakistan economy. It is one of the class commercial ventures with minor yield gives significant yields as a monetary improvement. Training and business adjacent to in territory of venture. Governments have at all times open worries about headway in the field of data innovation for being alongside the center segments for future financial improvement and practical development. Individuals increased right of section to IT equipment in 1985 when the Government formally reported IT imports for practical utilization. The innovation hurricane continue attacking the globe because of the productive monetary terms it had cut down which likewise enveloped creating nations like India in the 90s. The most adaptable of the whole field in IT segment is telecom industry. The telecom business gives items utilized by overall venture and the truck driver also. Pakistan has put aside rate with the worldwide telecom change and gave the general public unfathomable accommodations, disgusting advancements and expansive systems. Our study manages the effect of data innovation as imports and fares of correspondence and PCs things as an autonomous variable, on financial development (GDP) and the others elements included as needy variables as Trade, GDP, enlistments in training segments, death rate of guys and females and gross altered capital arrangement.

Impact of Information Technology on Economic Growth – Literature Review:

This study assesses the short and long run impacts of information and communication technology (ICT) use and economic growth in power utilization utilizing OBCD board information for the time of 1985-2012. This study utilizes a board unit pull test representing the nearness of cross-sectional reliance, a board co integration test, the pooled mean gathering relapse strategy. The outcomes affirm that both economic growth and (ICT) invigorate power utilization. The discoveries infer that OBCD nations have yet to accomplish vitality productivity picks up from ICT development.  (SALAHUDDIN AND ALAM 2015) This study gives the far reaching full information on the part of information technology in the after war growth of US economy from the change of the telecommunication offices and the telecommunication instruments industries from side to side the viable commercialization of semiconductor technology. The reiterations of built up advancements by the growth of capital and work endeavors clarify by a long shot the biggest extent of US economic growth. The outcome finds that the huge growth abating, amid the uncountable droop, was driven by humbly negative total efficiency growth. (JORGENSON AND SAMUELS 2015)  This exploration examines the issues that are confronted by SMEs (little and medium undertakings) in the assembling area in KOSOVO with uncommon accentuation on issues connected with the utilization of various technologies. Comparative examination from provincial countries was utilized to think about the discoveries of momentum exploration so as to have the better understanding and discovering the position of KOSOVO SMEs in such manner. This exploration was directing quantitative strategy through an organized survey with a specific end goal to acquire the required information. (ALIU AND HALILI 2013)

This article presents inspecting research on the utilization of information communication technologies (ICT) or PC refereed technologies internet cell and telephones, among settler women who are private friend savagery survivor (IPV) in Canada. An appraisal of whether this type of innovation helped with the advancement of suspicion or security arrangements is found. The information depends on non-irregular studies of foreigner women IPV, survivors with Canada. An examination of the member’s different demographics demonstrates that the computerized partition inside this populace is not affected by access or information to the innovation, yet by different figures frequently not talked about the inter-sectionality models. (ZAIDI, FERMANDO AND AMMAR 2015). This study approximation the properties of internet usage, financial development and trade directness on economic growth using time series data for south Africa, for the period of 1991-2013. Structural unit test and ARDL, co integration tests, are performed to inspect the long run connection amongst financial development, internet usage, trade and economic growth. Findings from ARDL co integration tests designate a long run association between the variables. Results from ARDL, estimates indicate a positive and significant long-run relationship between economic growth and internet usage in South Africa. This study mentions that the south Africa government, continue with policies that aim to invest more resources, into its internet infrastructure to further enlarge its network and usage (SALAHUDDIN AND GOW 20115). The study defines the instrumental relationship among information technology and communication to increase economic growth in Australia by using data of five decades. The context that is used in this article is the single sector aggregate production function that is the first comprehensive method to include non ICT and ICT.  He implies that information communication technology capital granger resulting economic output and many factors.. (SHAHID-UZ-ZAMAN AND ALAM 2014)

The paper review of the economic improvement in India economy since the 1980, with particular significance on information communication technology. He dissected the effect of economic growth through two key channels. To start with is the immediate commitment of ICT investment to total economy and the second is an aberrant effect of ICT on aggregate element productivity. The outcomes tell that expanding part of ICT investment in driving total economic growth in India normally restricted to administrations segment and the economy does not extend in abroad. Then again, there is an expanding component in efficiency growth through showcasing administrations and it’s added to total profitability growth. India’s fare centered around ICT division has change effectiveness in its quickly developing administration economy. (ERUMBAN AND KUSUM, 2015). This article analyzes the major relationship between information communication advancements that demonstrates the base money related extension and economic improvement in Asian countries over the 12 the year 2001-2012. By board contegration technique, the experimental result demonstrates these variables are co integrated with a short run and a long run causal connection between ICT base and economic growth. (PRADHAN, ARVIN AND NORMAN 2015). This article depicts the offer of investment in information technology on economic output and proficiency in Australia over a time of four years. The strategy is utilized as a part of this article is the total creation work that IT capital is considered as a different contribution of generation alongside non-capital and work. The outcome tells the affirmation of advancement in the Australian economy in the 1990s. In any case, in the present circumstance, the part of IT in output and work efficiency backed off.  (SHAHIDUZZAMAN AND ALAM 2013)

This examination work explores the association of insights and communication technology (ICT) to the economic profitability and growth in the Latin America in 1990-2013. The study is unfilled at two phases. To begin with, the study checks in the aggregate level of economy for the numerous countries. Besides, it assesses the connection of ICT economic growth and profitability in five countries Brazil, Argentina, Colombia, Chile, and Mexico. The general reason that the work creation hole stays inside the crevice in ICT Capital. The part of ICT is low expressive less one-6th of the aggregate capital. The examination by the economic development base for above countries demonstrates the blend of capital is the fundamental purpose behind growth in the most out of control rising commercial enterprises. (HOFMAN, ARAVENA AND ALIAGA 2016)

Methodology:

In this study, we estimated our data through the technique (ordinary least square)

Dependent Variable: LOG_GDP
Method:  Ordinary Least Square
Sample: 1975  to  2015
Included observations: 41
VariableCoefficientStd. Errort-StatisticProb.
 FEMALE  MORTALITY  RATE-31.100507.963907-3.9051810.0005
 EXPORTS  OF  COMPUTERS ITEMS -0.0224300.079331-0.2827390.7792
 GFCF 0.1721230.1226981.4028110.1703
 IMPORTS of  COMPUTERS ITEMS -0.4393620.100936-4.3528690.0001
 MORTALITY  RATE OF MALES12.759794.2838892.9785520.0055
 PRIMARY ENROLLMENT0.3546990.2242751.5815380.0036
 SECONDARY ENROLLMENT-0.0413100.088360-0.4675210.0433
TRADE-0.3104720.141858-2.1886160.0360
C121.082523.540075.1436770.0000
R-squared0.999003    Mean dependent var28.08195
Adjusted R-squared0.998754    S.D. dependent var1.656962
S.E. of regression0.058481    Akaike info criterion-2.649050
Sum squared resid0.109440    Schwarz criterion-2.272900
Log likelihood63.30552    Hannan-Quinn criter.-2.512077
F-statistic4009.927    Durbin-Watson stat1.444860
Prob(F-statistic)0.000000

Y= 121 – 31.1X2 – 0.022X3 + 0.17X4 -0.44X5 +12.76X6 +0.35X7 -0.04X8 – 0.3X9

Interpretation

Mortality rate female

Β2 = -31.1

Y = β2X2

Y = -31.1X2

Every one unit increase in X2 (mortality rate female) will decrease the economic growth (Y).

Exports of communication Items

Β3 = -0.022

Y = β3X3

Y = -0.022X3

Every one unit increase in X3 will decrease the economic growth.

Gross fixed capital formation

Β4 = 0.17

Y = β4X4

Y = 0.17X4

Every one unit increase in x4 will increase the economic growth.

Imports of communication items

Β5 = -0.44

Y = β5×5

Y = -0.44X5

Every one unit increase in X5 will decrease the economic growth.

MORTALITY_RATE_MALE

Β6 = 12.76

Y = β6X6

Y = 12.76×6

Every one unit increase in X6 will increase the economic growth.

Primary enrollment

Β7 = 0.35

Y = β7X7

Y = 0.35×7

Every one unit increase in X7 will increase the economic growth.

Secondary enrollment

Β8 = -0.04

Y = β8X8

Y = -0.04×8

Every one unit increase in X8 will deceases the economic growth.

TRADE

Β9 = 0.3

Y = β9X9

Y = 0. 3×9

Every one unit increase in X9 will increase the economic growth.


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