Governance and Information & Communication Technology in Islamic Countries: A Generalized Method of Moments Inference

Role of governance is undisputedly pivotal in managing the resources of a nation. Its importance for a better society and economy has been widely discussed in literature (North, 1990; Kaufmann et al., 2000; La Porta et al., 1999). Moreover, the 21 st century has brought novel changes such as advent of information and communication technology (ICT). Information revolution has reformed societies and economies around the globe. Accordingly, this paper combines the two above-mentioned phenomena in this paper and puts forward a hypothesis that ICT has a positive influence on governance. In addition to ICT, Human Development Index (HDI) is also expected to have positive influence on governance. To conduct rigorous statistical analysis of the relevant variables, we use a widely used robust estimation technique, known as Generalized Method of Moments (GMM). This statistical technique has the ability to cope with endogeneity and heteroskedasticity in the presence of instrumental variables. In addition, Granger causality has been applied to test the causality between the two governance and ICT. Recommendation on the basis of findings are made after the statistical analysis is conducted.