ICT Penetration and Aggregate Production Efficiency: Empirical Evidence for a Cross-Section of Fifty Countries

This study investigates the impact of telecommunications penetration on the aggregate production efficiency in a large cross-section of fifty countries. We show that higher levels of ICT capital stock penetration increase technical efficiency levels in the aggregate production function. However, depending on the geographical location the effects of ICT penetration are different. Our empirical findings suggest that increasing the per capita telecommunications capital in the form of land line and mobile telephones, computers, Internet access and the like is likely to considerably increase productive efficiency in case of the poorest nations, while in the more developed countries such gains have been largely exhausted. In the end we offer several avenues for more research based on the caveats discovered while working on this study. 2 I