Causal Relationship between Information Communications Technology and Economic Growth in European Countries

The study examines the causal relationship between information and communications technology (ICT) and economic growth in twenty two European countries. The Granger causality test is performed following the cointegration approach to reveal the direction of causality between ICT development and economic growth. Test results indicate two things; 1) there is long-run equilibrium relationship between ICT development and economic growth for Cyprus and Malta; and 2) a diverse one-way directional causality is evidenced, either ICT-led growth for Cyprus and Spain or growth-led ICT development for Portugal and Sweden. The authors provide a full discussion of the European findings based on their empirical findings