Pratim Datta and Victor W. Mbarika
Over the past two decades, both developed and developing countries have been
investing a significant portion of their resources in the creation of an information
infrastructure. However, speculation abounds regarding the efficacy of information
infrastructure investments, especially when the opportunity cost for investing
in IT is measurably high among developing nations. This longitudinal study introduces
and explores infrastructure development and service-sector growth as key metrics
for IT investment success. It also traces the notional evidence of IT infrastructure
development as mediating the causal relationship between information infrastructure
investments and service-sector growth. Using data from low-income, middle-income,
and high-income countries, the mediating and lagged impact of information infrastructure
on service-sector growth reveals that information infrastructure development
does play a significant role as a mediator. It points out that information infrastructure
investments can be a misleading causal antecedent if countries fail to develop
their infrastructure. It also provides evidence of a recursive relationship
between infrastructure development and service-sector growth. An exploratory
time series analysis across different country categories suggests that information
infrastructures must be properly developed to reconcile the paradox. In addition,
exploratory tests reveal a distinct divergence between infrastructure investments
and infrastructure development among different country tiers.