Internet penetration, human capital and economic growth in the ASEAN economies: evidence from a translog production function

This study examines the effects of human capital formation and Internet penetration on economic growth. The Internet encourages economic growth by providing innovative applications and opportunities through a new medium of information exchange. The growth potential that the Internet provides, however, is dependent on the human capital formation of an economy to fully absorb the potential capabilities of the Internet. This study employs a panel dataset of 10 Association of South-East Asian Nations (ASEAN) economies from the period of 1999–2014 and examines the relationship using a translog production function model. The estimated results report that human capital formation and Internet penetration is positive and significant towards economic growth. Furthermore, human capital formation and the Internet interacts positively and is significant to economic growth, providing support for the absorptive ability of human capital. The ASEAN economies should continue to adopt policies that encourage human capital formation and support the development of the communication technology sector to promote affordability and accessibility of the Internet across the region.