Islamic Countries Economic Growth and Ict Development: the Malaysian Case

In this paper, we conduct an examination on the causality and relationship between information and communication technology (ICT) and economic growth in an Islamic country, namely Malaysia. The study period in this paper is divided into two: from 1960 1982, and from 1983 2004. This is to examine if the contribution of ICT investment varies in different sample periods. The causality result showed that for the period 1960 – 1982, economic growth led to growth in ICT investment in Malaysia. In the second period (1983 – 2004), reverse causality was observed (ICT investment led economic growth in Malaysia). Such phenomenon could be caused by the major economic structural change that happened during the second period, attributed largely to the various industrialization strategies and technology policies implemented in the country. In this period, ICT investment had a positive and significant impact on Malaysia’s economic growth. In fact, ICT investment was the major source for the Malaysian economy experiencing increasing returns to scale in the second period. The positive economic benefits stemmed from ICT that Malaysia experienced may be a useful lesson for other Islamic economies.