Information and communications technology use and income growth: evidence of the multiplier effect in very small island states

Very small island states face unique challenges, such as volatile economies, increasing vulnerability to natural disasters, particularly with raising seas, increases their dependence on the world economy. Despite their growing use of ICTs, the results are mixed in terms of the effect of growing ICT usage on income growth. This paper investigates how growth in ICT usage may enable growth in per capita Gross Domestic Product (GDP) in very small island states by analyzing the effects of average ICT usage on GDP growth based on the most recent data available from the World Bank and from the International Telecommunications Union (ITU). Following an analysis of data over four years of 32 very small island states, this paper identifies an ICT multiplier effect that may explain and predict the relationship between average ICT usage and GDP growth. By showing how the ICT multiplier effects may be connected to GDP growth, this paper adds to what we know about the relationship between these two indicators in very small island states. This has implications for how government interventions can enable ICT capacity to bring about GDP growth.