The Causal Relationship between ICT Investment and Labor Productivity Growth

By the advent of ICT in recent decades and its continual growth, productivity and economic growth have increased rapidly specially in developed countries. However, the interaction between productivity growth and ICT investment is still subject of research at international level. This studyexamines the causality between the ICT investment and labor productivity growth using a panel data including 25 developed and 23 developing countries for the period2000- 2008. We use the Granger causality test and GMM method to estimate the model.The results demonstrate that bilateral causality between two variables exists. In other words, a growth in ICT investment leads to a growth in labor productivity and vice versa.