Does ICT diffusion reduce poverty? Evidence from SAARC countries

Abstract

The present study aims to explore the relationship between ICT diffusion and poverty reduction in SAARC countries using panel data from 2005 to 2020. This study uses econometric techniques robust to cross-sectional dependence (CSD) including Pesaran's CSD tests; second-generation unit root test; Pedroni, Kao, Westerlund cointegration tests; CS-ARDL, Driscoll-Kraay (DK) standard error approach; and D&H causality test. The investigation is based on the ICT diffusion index constructed using principal component analysis (PCA). The study's major finding shows that ICT diffusion reduces poverty both in the long and short run, indicating the favorable impact of ICT on the development process in SAARC countries. Further, economic growth, financial development, and remittances all serve to minimize the poverty level. The causality test reveals bidirectional causation between ICT diffusion and poverty reduction. The study highlights the crucial role of ICT diffusion and selected economic variables in reducing poverty. The findings of the present research shall benefit policymakers to formulate appropriate policies and programs to improve the well-being of people and enhance macroeconomic performance, which impacts both the societal and environmental development of a country.