Information-Communication Technology Impact on Labor Productivity Growth of EU Developing Countries

The aim of this study is to investigate the ICT impact on labor productivity growth of EU developing countries. Empirical studies of the role of ICT as one of the main determinants of productivity growth, for developing countries have produced disagreement. To help clear up the subject, this paper employs a Generalized Method of Moments (GMM) through a dynamic panel data approach on the sample of 25 European developed and developing countries over the period of 2001-2010. The results indicate a positive and significant impact of ICT on labor productivity growth in developed and developing countries, but the terms of impact in developing countries rely on human capital, a contribution of a higher educational level, advanced research qualifications and development activity. Comparing to developed countries, the growth accounting approach indicate that developing countries have similar relative ICT contribution to labor productivity growth, but their average growth rate of labor productivity is 6.8 times higher. The main conclusion is that education, especially of higher levels, is the critical factor of productivity and growth of EU developing countries and that must be taken as development policy implication in these countries