Social capital formation, internet usage and economic growth in Australia: evidence from time series data

Salahuddin, Mohammad and Tisdell, Clem and Burton, Lorelle and Alam, Khorshed (2015) Social capital formation, internet usage and economic growth in Australia: evidence from time series data. International Journal of Economics and Financial Issues, 5 (4). pp. 942-953.


This study estimates the short- and long-run effects of social capital and internet usage on economic growth using annual time series macro-data for Australia for the period of 1985-2013. Dickey-Fuller generalized least squares unit root and Zivot and Andrew structural break tests are conducted to assess the stationarity of all the series.
Hansen-Gregory and autoregressive distributed lag (ARDL) bounds tests confirm a cointegrating relationship among the variables. ARDL estimates indicate a significant long-run positive relationship between economic growth and internet usage. No significant relationship is found between economic growth and social capital in both the short- and the long-run. However, the interaction term of internet usage and social capital has a significant positive association with economic growth both in the short- and long-run. The short-run relationship between economic growth and internet usage is insignificant. A bidirectional causal link exists between internet usage and
economic growth and between the interaction variable and economic growth. Unidirectional causality runs from internet usage to the interaction variable. No causal relation is found between social capital and economic growth. The findings are also supported by applications of a different econometric method, namely dynamic ordinary least squares estimation. The positive interaction
effect of internet use and social capital on economic growth supports the recently raised view that Australia should take into account social capital formation in its digital divide policy.

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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Permanent restricted access to Published Version due to Publisher copyright policy.
Faculty / Department / School: Current - Faculty of Business, Education, Law and Arts - School of Commerce
Date Deposited: 06 Nov 2015 02:54
Last Modified: 18 Jul 2016 04:23
Uncontrolled Keywords: autoregressive distributed lag, Australia, economic growth, social capital, Granger Causality, internet usage
Fields of Research : 08 Information and Computing Sciences > 0806 Information Systems > 080602 Computer-Human Interaction
14 Economics > 1402 Applied Economics > 140202 Economic Development and Growth
14 Economics > 1403 Econometrics > 140305 Time-Series Analysis

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