ICT and Economic Growth

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  Main Findings

  The 2001 OECD Ministerial report, "The New Economy: Beyond the Hype", concluded that information and communications technology (ICT) is important and has the potential to contribute to more rapid growth and productivity gains in the years to come. Both the 2001 and 2002 OECD Ministerial meetings reiterated the importance of ICT for growth performance and requested the OECD to continue its work in this area. A specific request for further work on ICT and business performance was made to the OECD in the autumn of 2001, by the US Secretary of Commerce, Mr. Evans. This report, which responds to OECD Ministers and Secretary Evans, revisits the contribution made by ICT to economic performance using more recent data to assess the degree to which the empirical findings that appeared valid at the end of 2000 remain in tact. It draws on a range of new statistics and empirical analysis that was not available for prior OECD work...

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  The Diffusion of ICT in OECD Economies

  This chapter examines the diffusion of ICT across OECD countries. It uses official statistics, which may differ substantially from previously published private estimates of ICT diffusion. It shows that ICT networks continue to diffuse throughout the OECD area, even during a period of slower growth. However, large differences in the uptake of technologies persist across the OECD, both between and within OECD countries. Cost differentials and structural differences are among the factors explaining these differences, as is the state of the business environment in different OECD countries...

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  The Contribution of ICT to Growth

  This chapter provides evidence on the impact of ICT at the macroeconomic and sectoral level. It shows that ICT investment has contributed to growth and labour productivity in all OECD countries for which data are available, but more in the United States than in any other OECD country. Moreover, rapid technological progress in the ICTproducing industry has contributed to rapid productivity growth in some OECD countries, notably the United States, Finland, Ireland, Korea and Sweden. In a few countries, notably the United States and Australia, there is also evidence that sectors that have invested much in ICT, for example wholesale and retail trade, have experienced more rapid productivity growth. These impacts of ICT on productivity have not disappeared with the recent slowdown; part of the acceleration in aggregate productivity growth in certain OECD countries, notably the United States, is structural and could continue in the years to come...

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  ICT and Firm-level Performance

  This chapter provides evidence on the contribution of ICT use to business performance, based on detailed firm-level studies. It demonstrates that the use of ICT indeed contributes to improved business performance, but only when it is complemented by other investments and actions at the firm level, such as changes in the organisation of work and changes in workers skills. The chapter also shows that ICT is no panacea; investment in ICT does not compensate for poor management, lack of skills, lack of competition, or a low ability to innovate. Not all firms will therefore succeed in generating returns from their ICT investments; many will fail. In addition, drawing the benefits from ICT investment takes time. Moreover, there are important cross-country differences in firms’ use of ICT. Firms in the United States are characterised by a much higher degree of experimentation in their use of ICT than European firms; they take higher risks and opt for potentially higher outcomes...

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  Policy Implications

  This chapter draws implications from the empirical evidence presented in previous chapters for policy makers. It argues that governments should reduce unnecessary costs and regulatory burdens on firms to create a business environment that promotes productive investment. This involves policies to enable organisational change, to strengthen education and training systems, to encourage good management practices, and to foster innovation, e.g. in new applications, that can accompany the uptake of ICT. Moreover, policy should foster market conditions that reward the successful adoption of ICT; a competitive environment is key for this to happen. Governments will also need to work with business and consumers to shape a regulatory framework that strengthens confidence and trust in the use of ICT, notably electronic commerce. Policies to foster growth in services are important too, as ICT offers a new potential for growth in the service sector, providing that regulations that stifle change are adjusted or removed. Finally, the report reaffirms the importance of economic and social fundamentals as the key to lasting improvements in economic performance. A short set of conclusions completes the report...

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