Chapter attractive services to customers. Recently Grameen

Chapter Six

Findings and Policy Implication

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6.1 Findings

6.1.1
In Case of South Asian Economies

The
average GDP growth and productivity growth of South Asian economies are 7.49
percent and 9 percent respectively. Mobile cellar subscription is increasing
day by day. The proximity of telephone subscription is very low because of intensive
use of mobile. For example, in Bangladesh, nowadays, there is greater than one
mobile phone users in each house. And there is hardly to find one telephone
set. The intensity of internet using is also increasing day by day in this
region. In Bangladesh, the numbers of mobile phone companies provide attractive
services to customers. Recently Grameen Phone has provided 1 GB internet for
the price of 9 taka. But to use the internet, there is less availability of
fixed broadband subscription in these economies.

In
these economies, the supply of money is half of the GDP. If the money supply
increases in the economy, there creates more scope to access to finance easily
for business investors. Since the amount of broad money is higher in South
Asia, there is availability of liquid money for investment. Besides domestic
credit provided by financial sector is higher than the domestic credit provided
by banks in this region. And the private sectors are taken much loan than
central government.

Through
regression coefficient it is clear that productivity growth fells positive
impact on GDP growth but ICT growth and financial development fells negative
impact on GDP growth. Labor productivity is the amount of goods and services
produced per hour by labor and GDP is the amount of goods and services of the
economy. That is why the productivity growth indicates that there is increase
in GDP growth.

The
impact of GDP growth and ICT growth fells positive impact on productivity
growth but financial sector fells negative impact on productivity growth.
Higher productivity growth generates high GDP growth by producing higher
revenue to enable firm producing greater amount of output with the same level
of input.  And now the emergence of new
technological system produces the greater amount of output per unit of hour.
Since productive growth is directly related to GDP growth, it fells more impact
on it that ICT sector.

In
these economies, labor productivity growth and GDP growth also fell positive to
stimulate the ICT growth. When the productivity growth increases, the firms
feels the need of adoption of new ICT tools for generating more profit. And
when economic growth rises, the people of that economy feels the greater demand
of using technology.

Besides,
GDP growth fells positive impact on financial development. Note that GDP growth
is an important measure of economic growth. Since in these economies economic
growth rises, they fell the need of establishment more financial institutions,
attaching more people with financial services and thus create financial
development.

 

6.1.2
In case of South East, Central Asia and Other Economies

In
these economies, the GDP growth is faster than the productivity growth. But
they both are upward trendy. Though in year of global financial crisis, the GDP
growth and productivity growth negatively impacted, these economies overcome it
properly.

Before
the global financial crisis, financial development grows much faster in these
economies than ICT growth. But after the global financial crisis, ICT growth
surpasses the growth of financial development. Since because of financial
crisis, there was devastating effect on financial sector in these economies.
But ICT adoption has grown in consistent manner.

In
these economies, labor productivity fells positive impact on GDP growth.
Indonesia is one of the most affluent countries in South East economy. They
were concerned with their low GDP growth. Later they found the reason why GDP
growth performance is low. The reason is poor productive performance. Then they
took policy associated with productivity to stimulate GDP growth.

The
growth of GDP and ICT sector fells positive impact on productivity growth. But
the magnitude of impact of GDP growth is more because it has direct association
with labor productivity. In Korea, mobile cellular subscription and intensive
use of ICT tools has increased the output per worker (Kumar, 2015).

The
growth of labor productivity and financial development fells positive impact on
ICT growth. And here productivity has got priority to stimulate ICT growth than
financial development. Kumar (2016) has found bi-directional relationship
between labor productivity and economic growth. This implies that if use of ICT
tools increases productivity, the firm feels the need of more adoption of ICT
tools for the growing productivity. And if financial system is developed, the
financial institution feels the need of sophisticated ICT tools. Finally the
growth of ICT and GDP enhances the growth of financial development.

 

6.1.3
In Case of African Economies

In
African economies, the growth of GDP is more rapid than that of productivity
growth. And financial growth is higher than ICT growth in most of the time
periods. The global financial crisis is not impacted the financial system
because their weak financial system are not linked with global economy.

Labor
productivity growth, ICT growth and financial development have positive impact
on GDP growth. Since labor productivity is an essential factor to increase GDP
growth. It plays an important role. Besides the African economies develops
their financial system by reducing government interventions and privatizing the
financial institutions which ensure the GDP growth of the economy (Gries et
al., 2009).

GDP
growth ensures the productivity growth. Besides the ICT growth and financial
development also impacted positively on the level of productivity growth. The
productivity growth and financial development growth fells positive impact on
ICT growth. Since the developed financial system feels the necessity of
advanced technology. And to make the labor more productive, the firm needs the
feel of ICT tools. And finally the growth of labor productivity and ICT growth
fells positive impact on financial development growth of African economies.

 

6.1.4
In Case of Latin American and Other Economies

Global
financial crisis had also impacted the financial sector of Latin American
economies. Before financial crisis the growth of financial sector is more than
the growth of ICT sector. But after that the growth rate reduces than ICT
growth.

The
growth of labor productivity increases the growth of GDP. Hofman (2016) said
that the divergence of GDP growth between U.S.A and Lain American economies is
the gap of productivity growth. Conversely the GDP growth also contributes to
increase productivity growth.

To
increase ICT growth, the financial development plays an important role. And to
increase financial development, ICT growth does not play role. So there exists
unidirectional relationship in between them.

 

6.2 Policy Implication

6.2.1
In Case of South Asian Economies

It
is very difficult to take the policy for economists to stimulate the
development of one economy. In this study, for adopting policies, two tools are
used. First one is regression coefficient which shows the current effect of one
variable on another. And second one is impulse response function which forecast
the future trend based on the continuation of current trend. According to
current trend, ICT based policy is appropriate for the development. Since1 percent
increase in ICT diffusion enhances labor productivity by 0.04 percent, again 1
percent increase in labor productivity enhances GDP growth by 0.8 percent and 1
percent increase in GDP growth enhances CIF by 1.31 percent. Thus ICT growth
create chain reaction to the path of development.

But
according to impulse response function, financial development and ICT may fell
negative impact on GDP growth and productivity growth when the financial
development and the adoption of ICT tools will reach to threshold level. Then
they may not able to add value in the economy. In future, labor productivity or
GDP growth based policy may be appropriate for the development. Between these
two, GDP growth based policy should get most priority since it may fell impact
most on ICT and financial sectors. The economy can also take financial policy
along with it because it enhances the growth of ICT sector more than the other
variables.

 

6.2.2
In Case of South East, Central Asia and Other Economies

In
these economies, the current trend suggests that economic growth based policy
and labor productivity based policy are appropriate for the development. In the
first policy, GDP growth increases productivity growth, again productivity
growth increases ICT diffusion and that increases the financial development.
And in the second policy, labor productivity increases GDP growth, that
increases financial growth and that again increases ICT growth. According to
economic forecasting, financial development policy may impact ICT growth more
and vice versa. Besides to increase GDP growth, financial policy and ICT growth
policy may impact almost same and there is less impact of productivity. And
finally to increase productivity growth, the ICT growth based policy, financial
policy and GDP growth based policy may impact at an increasing trend and steady
state level respectively.

 

6.2.3
In Case of African Economies

In
these economies, the current trend suggests that economic growth based policy
or financial development based policy or ICT based policy are appropriate for
the development. According to economic forecasting, financial based policy may
be more effective than economic growth based policy and ICT based policy. Due
to the shock of financial development, the responsiveness of GDP growth, productivity
growth and ICT growth may be good.

 

6.2.4
In Case of Latin America and Other Economies

In
these economies, the current trend suggests that labor productivity or economic
growth based policy and financial development based policy are needed. According
to economic forecasting, labor productivity or economic growth based policy may
have no problem. But this trend suggests that ICT growth based policy may be
more effective to enhance financial development. Since financial policy may
have negative impact on ICT growth.

 

 

 

 

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