THE NON-LINEAR RELATIONSHIP BETWEEN ICT DIFFUSION AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM MENA REGION AND AFRICAN COUNTRIES

Abstract

This research examines the non-linear effects of information and communication technology
(ICT) diffusion on economic growth in 30 MENA and African countries from 2000 to 2020.
The study employs panel smooth transition regression (PSTR) and the generalized method of
moments (GMM) to analyze the data. Some main conclusions are presented as follows.
First, the PSTR models effectively capture the smooth non-linear effects of ICT diffusion on
economic growth. In countries with high levels of ICT development, ICT diffusion positively
impacts economic growth when ICT diffusion is below a threshold of 3.88. Above this
threshold, the effects change. In less ICT-developed countries, ICT development initially
negatively correlates with economic growth up to a threshold of 2.10. Beyond this threshold,
the relationship reverses, becoming positive.
Second, in the least ICT-advanced countries, a "leapfrog effect" is observed, where ICT's
impact on economic growth shows a continuous upward trend.
Finally, the GMM results show that the effects of ICT on economic growth differ between
more and less ICT-advanced countries. In the most ICT-advanced countries, the relationship
between ICT and economic growth follows an inverted "U" shape. In the least ICT-advanced
countries, the relationship takes on a "U" shape.