Effects of internet usage on economic growth in Ghana

Abstract

The study examines the impact of internet usage on economic growth highlighting the challenges faced by developing nations. While some data suggested that connectivity in Ghana was rising quickly, infrastructure, connectivity, and accessibility seem to be deficient in specific areas or throughout some developing countries. This current study applied autoregressive distributed lag model (ARDL) to examine the effect of internet usage on economic growth in Ghana. It also examined the effect of government effectiveness on economic growth in Ghana. Quarterly data spanning a period from 2000 to 2020 was employed in the study. The study reveals that internet usage positively impacts short-term economic growth. However, in the long-run internet usage has a detrimental influence on economic growth. Government effectiveness has a significant positive relationship with economic growth both in the long and short run. The composite effect of internet usage and government effectiveness is positive and significant, affecting Ghana's economic growth in both short and long terms. Based on the findings, the study recommends governmental agencies support in improving internet infrastructure thus by directing more resources to investing in infrastructure with the intention that it can target the vast majority of the population to ensure more accessibility of the use of the internet to boost productivity. The study also recommends that policies and programs that ensure policy formulation, implementation and credibility of governments’ commitment to such policies are fundamental for long-term sustainability of the economy.