Information and Communication Technologies (ICTs), in the simplest way possible, can be defined as all the devices, applications and systems that allow people and organisations to interact in and with the digital world.
It is evidenced by case studies of various nations that ICTs can contribute to the national GDP and help improve market competitiveness of a country’s goods and services. ICTs also have a positive impact on a country’s governance and promote its international economic integration, improve living standards, narrow inequality and improve the utilisation of natural resources. All these functions of ICTs make it a key player in the 21st century in enhancing the economic growth of developing countries; because ICTs can help them make up for what they lack in industrial resources by catching up to the developed world in terms of information. This importance is also reflected in the fact that most of the countries today have national “e-strategies” and donor agencies routinely invest in them.
Now, in developing countries, there are mainly two ways in which ICTs contribute to economic growth. One is through their manufacturing and another is through their use. As ICTs are a combination of various individual technological entities, they require manufacturing. And most of this manufacturing is outsourced by the developed countries to the developing countries. This point can be illustrated by the examples of China and India. China is the manufacturing hub for Apple and India is the country which handles the software designing and packaging work outsourced by Microsoft. Such process of outsourcing helps provide decent jobs to thousands of people in the developing countries thus, contributing to poverty reduction.
Also, such companies not only bring their jobs but also their knowledge, which they impart on to the workers of the developing countries. This equips the labour force with skills which means that even if the outsourcing companies were to leave, the people would have necessary skills and expertise to get a job somewhere else or even start their own ventures. All of these serve to make the economy more productive and efficient – delivering economic growth.
Furthermore, setting up manufacturing points and industries in the developing countries means paying taxes to these countries which will directly contribute to the GDP and GNP. Also, we know that industries and especially ICT industries are not isolated entities but part of a larger value chain. Thus, the impacts mentioned above do not stay limited to one sector but branch to multiple sectors; all contributing simultaneously to the economic growth of a nation.
Then there is the act of buying and selling. ICTs, regardless of their place of manufacture, often always find their way into the markets of the developing countries where they are bought and sold. And just this simple act of exchange generates millions of dollars in revenue to the governments depending on the size of the market. This revenue is economic growth. This is how the physical aspects of ICTs help deliver economic growth in the developing countries.
But aside from these physical aspects, there is also the economic growth brought on by the use/application of ICTs. This can best be described through the following “five routes to economic growth:”
Economy: ICTs vastly increase the access to data and information crucial to the supply chain, at significantly reduced costs. Such increased data greatly increases the entrepreneurial activities of a country, thus increasing the efficiency and productivity. All of these end up promoting economic growth.

Efficiency: The use of ICTs can make an entire nation more efficient. The production sector becomes efficient as a labour force comprised of human activity complimented by technology becomes faster, longer and much more diligent than a solely human staff. Also, ICTs when adopted at the state level brings about “e-governance” which brings transparency, accountability and greatly streamlines the often-painstaking bureaucracy of the developing countries. This reduces corruption and makes entrepreneurial activities much simpler by removing the middlemen and the time-consuming hassles. Also, the need to make repeated lengthy journeys for activities such as meetings, ordering, delivering etc. is also reduced as ICTs bring about journey substitution. These, in turn, not only energise domestic commercial activity but also attract foreign investment. Thus, enlarging and enhancing the economy.

Profitability: When the cost of input decreases and the process becomes efficient then the output produced is of high quality. This output can then be sold at a high-value market (the information about which is also obtained from ICTs). Add to that, a transparent and corruption-free process, as discussed above, and this greatly increases the profitability of produced goods of a nation. This also helps in delivering economic growth.

Upgrading: Upgrading is changing the production process from a lower value to higher value ones. ICTs also help in this. With the use of ICTs, a business can take itself online where it may be able to expand its coverage area by getting more orders from different places. ICTs can also play a role in delivering these orders with technologies like drones being employed for the purpose. The payment process is also greatly modernised with various e-payment platforms being utilised. Thus, the whole process gets upgraded in value.

Restructuring: Restructuring means a shift of resources from a lower productive sector to a higher productive one. As discussed in the points above, ICT makes many sectors of the economy highly productive while at the same time, it opens up completely new sectors of production. Thus, investment of resources can be concentrated in these sectors which will yield maximum benefits for the economy of developing countries.
Thus, with the cost of inputs significantly decreased, production streamlined, outputs yielding higher profits, previously low-value sectors upgraded and entirely new sectors opened up for investments, this is how ICTs help deliver economic growth in developing countries.
However, this is not an unlimited scope and ICTs do have limitations, especially in the area of information failures. In ICTs, all routes to economic growth pass through the domain of information and unfortunately, this very domain of information is limited in developing countries by five types of information failures, namely absence, poor quality, uncertainty, asymmetry and cost of information.
Absence of information means that the key information that the development actors need such as the population of a place, literacy rate, sex ratio, livelihood data, internet penetration rate etc. are not available or at least the means to obtain such information are not available. Poor quality of information means that even if the information is available, they may not be of the required quality and usually not in an open format. Uncertainty of information suggests that the information may be available and may be of the desired quality but still, the accuracy of it may be questionable in developing countries; as most of the time the methodology will not be adequately given and the data collection and analysis procedure will not be clearly elaborated. Then, there is the problem of asymmetry where some development actors have access to key information that others lack. And due to the lax regulations and implementation in developing countries, such actors who do have the information start acting as middlemen and use that information for power and profit instead of passing it on to others and acting as facilitators for the economic growth.
And even if none of these information failures exist and quality and reliable information is available to all in an open format, even then, access to such information would be hindered by the cost. Many developing countries are still struggling to lift significant portions of their population out of poverty, the slightest bit of cost associated with information, such as the cost of travel, bureaucracy etc. will prevent people from accessing it.
Therefore, with the I (information) component of ICT facing such severe restraints, the role that ICTs can play in delivering economic growth in developing countries becomes limited.
But, all in all, it is of no doubt that ICTs have a significant role to play in delivering and accelerating economic growth. In the developing countries, this role becomes even more vital as they have tried and failed to do so with more traditional means. ICTs can be utilised in a two-pronged approach to bring growth to countries.
Firstly, the setting up of industries for their manufacture and the market activity generated by their consumption generate direct revenue to the government and also generate thousands of direct and indirect jobs.
Secondly, the use of ICTs helps facilitate start-ups and other entrepreneurial activities which have a broad impact on the whole value chain and contribute to poverty alleviation. ICTs reduce the costs of input and make the production process cheaper and more efficient. Thus, more value can be levied on the output which in turn makes the business profitable. Multiply these individual effects by thousands of businesses employing ICTs and then we get a macro-level national economic growth.