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From Physical to Digital: What does IoT mean for economic growth?

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  • Aquije Ballon, Harry Fernando
  • Bahia, Kalvin
  • Castells, Pau

Abstract

While mobile technologies have already connected billions of people, the Internet of Things (IoT) is now adding all kinds of devices to the digital ecosystem. The potential benefits of connecting the physical world to the internet are vast, but not well understood. This study provides a contribution to quantify the contribution of IoT to economic growth. By leveraging a unique dataset that measures IoT connections by vertical industry across 163 countries between 2010 and 2022, we find that IoT made a significant contribution to GDP growth. On average, a 10 percentage point increase in IoT connections per inhabitant increased GDP by 0.7% in LMICs and 0.5% in HICs. We find that this impact is primarily driven by enterprise IoT, accounting for 80% of the total effect, while consumer IoT contributed 20%.

Suggested Citation

  • Aquije Ballon, Harry Fernando & Bahia, Kalvin & Castells, Pau, 2024. "From Physical to Digital: What does IoT mean for economic growth?," 24th ITS Biennial Conference, Seoul 2024. New bottles for new wine: digital transformation demands new policies and strategies 302494, International Telecommunications Society (ITS).
    • Handle: RePEc:zbw:itsb24:302494
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    References listed on IDEAS

    as
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    2. repec:aei:rpaper:1008568416 is not listed on IDEAS
    3. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
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    More about this item

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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