Internet Penetration and its Correlation to Gross Domestic Product: An Analysis of the Nordic Countries

Abstract

Studies continually review the correlation of GDP growth in a country against Internet or ICT penetration. These studies lack a focus on causality however, leaving many to wonder which variable is the driving force for change and which is responding to that force. Rather than focusing on this ICT-to-GDP metric in a developing country, this analysis looks at the world’s leading region in Internet adoption; the Nordic region. An analysis of GDP data confirms that these countries not only have some of the highest Internet adoption, but also some of the highest GDP levels per capita globally. This data is then examined over a time series, determining not only a correlation between the two variables but more importantly, demonstrating that Internet adoption is a direct driver of GDP growth in an economy.