ICT "bottlenecks" and the wealth of nations: a contribution to the empirics of economic growth

The bulk of ICT is made by weightless, implementable and infinitely reproducible knowledge products (such as software and databases) (Quah, 1999) which are vehicled by telephone lines, accessed through internet hosts and processed and exchanged through personal computers. The specification of the labour augmenting factor in the aggregate production function with proxies of the above mentioned factors crucially affecting the diffusion of (non rivalrous and almost non excludable) knowledge products provides interesting answers to some of the open issues in the existing growth literature. The most recent information, even though available for a limited period, shows that telephone lines, personal computers, mobile phones and internet hosts significantly affect levels and growth of income per worker across countries. The result is robust to changes in the econometric specification and in the estimation approach. Exogenous subsample splits find that the ICT-growth link is stronger in OECD countries and in countries with high financial freedom confirming that financial liberalisation plays a crucial role in stimulating ICT innovation and growth.