Whose ICT Investment Matters to Economic Growth: Private or Public? The Malaysian Perspective

Theoretical and empirical research on the economic benefits of ICT is represented in academic and policy-related publications worldwide. Most of these studies assess the impact of ICT in countries as a cohort and most conclude that ICT is indeed a key driver for economic growth. Nevertheless, we are of the opinion that there is room for more research on this issue, especially pertaining to developing countries such as Malaysia, in light of the extensive ICT-based investments undertaken by the country in recent years. Consequently, we examined the effect of ICT investment carried out by both the private and public sector on Malaysia's economic growth over the period 1992 – 2006 using the ARDL econometrics approach. The empirical results suggest that ICT has had a significant impact on Malaysia's economic growth during this period of time, suggesting good payoffs from the investment. Specifically, ICT investments made by the private sector seem to have contributed significantly to the country's growth compared to investments made by the government. This implies that the private sector has adapted well to the various ICT-based policies implemented in the country over the years. This also shows that Malaysia's economy is being driven by the private sector, especially by the manufacturing and wholesale industries. We are however of the opinion that in order to sustain economic growth leveraged against ICT, more concerted efforts need to be made in order to escalate ICT diffusion in the country. Such initiatives will ensure that the value potential of ICT investments in the economy is maximized, due to greater ICT-enabled community that will translate to escalated economic growth.