Granger Causality between Country-Level IT Investment and Economic Growth in the US

With the high interest in measuring the effect of IT investment, many researchers conducted research using various sources and analysis methods, and many studies have found the positive effects of IT investment. These studies were mainly conducted in competitive environments, and found that companies or countries with more IT investments were able to achieve better performance. However, it cannot be cleared whether the single country-level economic growth will increase or decrease by IT investment. The value added of the electronics industry can be increased when IT investment for teleconferencing is expanded, but the value added of the industries, which are related to the business travel and the oil industry, will be decreased at the same time. This study investigated the effect relationship between IT investment and economic growth by Granger causality method, which is comparing an equation to another equation included lagged some variables, using the US country-level data. As a result of the analysis, there was no causality between IT investment and economic growth. The increase in IT capital per worker positively affected the value added per worker (labor productivity) in the meaning of Granger causality, but the increase of labor productivity reduced IT investment per worker.