Impact of ICT Diffusion on Economic Growth: Exploring the Moderating Role of Financial Inclusion in E7 Countries

Abstract

This research examines the effect of Information and Communication Technology (ICT) diffusion on economic growth with the moderating influence of financial inclusion. This research focuses on E7 countries, which are among the leading emerging economies, including China, India, Brazil, Mexico, Indonesia, Turkey, and Russia. This study adopts a quantitative method using secondary panel data spanning 2001 to 2023 from the World Development Indicators. The proposed frameworks have been tested using fixed- and random-effect techniques to examine the relationships among variables. ICT is measured by Individuals using the Internet (% of population), and economic growth is captured by the GDP per capita (constant 2015 US$). Financial Inclusion is measured by the number of ATMs per 100,000 adults. This paper finds that ICT has a substantial positive impact on economic growth in E7 countries. Moreover, financial inclusion, as a moderator, also exhibits a strong effect. However, the interaction term between ICT and financial inclusion is significant and negative, indicating a weakening of the relationship. Moreover, control variables— namely, inflation, trade openness, and government expenditure—were included in this research to achieve robust results and ensure a substantial impact on the analysis. The findings are informative for policymakers in emerging economies seeking to improve economic performance through ICT and financial inclusion.