Abstract:
Using a panel data of 107 countries including developed, developing and ERF (Economic
Research Forum for Middle East, Iran and Turkey) countries over the 1995-2004 period, this
paper explores the impact of information and communication technology (ICT) growth on
overall economic performance through its positive impact on market contestability, with
respect to ERF countries and other developing and developed countries. We follow two
hypotheses: that improvement and growth of ICT make domestic markets (industries) more
contestable, and that the higher degree of market contestability improves the overall
performance of the economy, measured by the increase in real GDP. This paper finds that the
degree of overall contestability is positively and significantly affected by the increase in ICT
services in all three groups of countries. This result supports the hypothesis concerning the
importance of information in making markets more contestable. Moreover, there is a positive
and significant impact of ICT on per capita GDP. As for the impact of increase in the degree
of contestability on economic performance, we found that developed countries experienced a
positive and significant relation, but such a relation was insignificant in the other groups —
developing countries and ERF sample.