The Economic Impact of ICT

Measurement, Evidence and Implications

image of The Economic Impact of ICT

Information and communications technology (ICT) has become a key driver of economic growth over the past decade. The rapid diffusion of the Internet, of mobile telephony and of broadband networks all demonstrate how pervasive this technology has become. But how precisely does ICT affect economic growth and the efficiency of firms? And how well can these effects be measured?

This report provides an overview of the economic impact of ICT on economic performance, and the ways through which it can be measured. Using available OECD data, the first part of the book examines the available measures of ICT diffusion, the role and impact of ICT investment and the role of ICT-using and ICT-producing sectors in overall economic performance. The second part of the book offers nine studies for OECD countries, based on detailed firm-level data and prepared by researchers and statisticians from a wide range of OECD countries. These studies use a variety of methods and provide detailed insights on the effects of ICT in individual countries.



ICT and Business Productivity

Finnish Micro-Level Evidence

Widespread use of ICT in Finnish business enterprises is quite recent. Contrary to what was believed during the new economy boom, the increasing use of ICT is primarily a phenomenon within firms; the contribution of restructuring to the observed changes in aggregate ICT-intensity is rather marginal. Decompositions of productivity growth suggest, however, that experimentation and selection are quite intense among young ICT-intensive firms. After controlling for industry and time effects as well as labour and other firm-level characteristics, the additional productivity of ICT-equipped labour ranges from 8% to 18% corresponding to roughly a 5% to 6 % elasticity of ICT capital. The effect is much higher in younger firms and in ICT-providing activities. The finding for firm age is consistent with the need for ICT-complementing organisational changes. The finding for ICT-providing activities is not driven by the communications equipment industry but rather by ICT services. Overall, the excess productivity induced by ICT seems to be somewhat higher in services than in manufacturing. Manufacturing firms benefit in particular from ICTinduced efficiency in internal communication (linked to use of local area networks or LANs) whereas service firms benefit from efficiency in external (Internet) communication. We find weak evidence for the complementarity of ICT and education....


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