The Telecommunications (ICT) Investment and Economic growth(GDP) : A causality analysis-case study of Sweden

Abstract: This research paper investigates the causality issue between economic growth rate (GDP) and Information and Communication Technology (ICT) investment in Sweden by applying modern time series techniques. It mainly covers time series analyses of 30 years of Sweden data (1980-2009). During that period, development in Information and communication technology (ICT) infrastructure of Sweden was an evolutionary process based on innovation and technological knowledge. Telecommunication revolution which occurred and developed on the basic idea that economic change can be explained as co-evolution of technologies, institutions and development blocks (such as investment). The other way of describing it as an analysis of a long wave based on telecommunication technological revolution and key factor involved the share of investment in it. Standard tests of Unit roots, Cointegration and Granger Causality tests are presented. The main reason of such study is the assessment of ICT investment influence directly on economic growth. The results provide an interesting aspect that ICT investment share can possibly be a contributing factor to telecommunications infrastructure development but it cannot be as a whole sufficient enough for stimulating economic growth (GDP).It is found that one way causality running from ICT investment to economic growth (GDP) but only at one year lagged values not at other higher lagged values. The lack of long run relationship may be due to the inadequacy in reflecting the full effect of ICT investment in other complementary segments. The other complementary factors of ICT 's infrastructure are quite essential as well in describing economic growth and development level.