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Does e-government promote trade and economic growth? This paper attempts to answer this question by employing simultaneous equation estimation approach and using a crosssection data of 147 countries. This is first study which has empirically estimated the bilateral relationships between economic growth and e-government, trade and e-government and trade and economic growth. The findings indicate that e-government is a stimulant of both economic growth and trade. The results predict the presence of a bilateral relationship between egovernment and economic growth, trade and e-government, and unilateral causality exists from trade to growth.
JEL Classification: F14; H10; O40
Keywords: E-government; Economic Growth; Trade
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1. INTRODUCTION
The study on economic growth is dated back from Adam Smith (1776) discussed in his famous book "wealth of nation". There are many theories of economic growth presented by different economists, according to the situation that have been prevailed during that time [Ricardo (1817); Harrod (1939); Domer (1946); Solow (1956)]. The pioneer of theoretical framework of economic growth is Solow (1956) and his model was employed by Barro (1991); Mankiw, Romer, and Weil (1992); and Quah (1993, 1997).
Trade is an important topic that has been captured the attention of policy makers since the start of previous century. The debate on trade has been dated back from many decades but yet there is no consensus about the positive consequences of trade on economic growth. The positive influence of trade on economic growth is empirically supported by [Edwards (1998); Wacziarg (2001); Greenaway, et al. (2002)] whereas [Rodriguez and Rodrik (1999)] doubted the robustness of positive relationship between trade and economic growth. In this study we empirically check the association of trade with economic growth by incorporating e-government. The trade and e-government have bilateral relationship. Trade promotes e-government by diffusion of technologies and on the other hand e-government promotes trade by overcoming non- tariff barriers and asymmetric information.
E-govemment is referred to online availability of government to provide quick and efficient services to masses of people. Von Haldenwang (2004) defined e-government as a practice of information and communication technology (ICT) in public administration. E-government facilitates government in efficient provision of services to citizen by employing ICT infrastructure [Tandon (2005); Chen, et al. (2009); and Krishnan and Teo (2012)].