Information and Communication Technology (ICT) and Singapore’s economic growth

Singapore’s remarkable success in economic development has been strongly associated with the country’s vigorous efforts to embrace the Information and Communication Technology (ICT) revolution to promote economic growth. This study provides a comprehensive investigation of the contributions of ICT to Singapore’s economic growth during the 1990–2008 period. It documents three key findings. First, there is a strong positive association between the intensity of ICT use and value-added and labor productivity growth at the sector level. Second, ICT investment contributed approximately 1 percentage point to Singapore’s GDP during 1990–2008, and its role in driving economic growth has become increasingly important over time. Third, the contribution of the ICT manufacturing sector to Singapore’s growth was notable, but it was on the decline and faced difficult restructuring challenges. This paper also provides valuable policy lessons and strategic insights for governments in both developed and developing countries that aspire to embrace ICT to promote economic growth.     

ICT and Growth: The Role of Rates of Return and Capital Prices

We revisit the widely discussed contribution of investment in ICT to economic growth, focusing on differences in productivity and quality of ICT across countries and time. In a growth accounting approach, we look at the way rates of return and rates of asset price decline measure these aspects. Conducting a sensitivity analysis with data from the EU KLEMS database for the years 1990–2007, we introduce a constant rate of return and a constant rate of ICT price decline. Both alternative measurements somewhat downplay the role investment played relative to growth in multifactor productivity in the U.K. and the U.S. during 1995–2000. Moreover, we show that more than half of the ICT contribution to labor productivity growth results from changes in capital quality and composition rather than from quantity.     

Broadband connected employees and labour productivity: a comparative analysis of 14 European countries based on distributed Microdata access

In this study, the association between information and communication technology (ICT) intensity in firms and labour productivity is explored across 14 European countries for the years 2001–2010. ICT intensity is approximated by the proportion of broadband internet-enabled employees, a novel indicator measuring not only adoption but also diffusion within and among firms. Data have been retrieved by means of the distributed microdata approach (DMD) from registers on business, trade and education as well as from surveys on production, ICT usage and innovation activities in firms held at the national statistical offices. This pioneering approach allows access to otherwise confidential linked firm-level information in dimensions not earlier available. Pooled OLS estimations based on approximately 400,000 observations in harmonised and representative datasets show that in a majority of countries there is a significant and positive relationship between the proportion of broadband internet-enabled employees and labour productivity in firms. However, the strength of the relationship varies across countries and industries. Manufacturing firms receive 50% larger estimates than the services firms, while the latter instead experience the positive association more frequently.     

Evaluating the effects of investment in information and communication technology

Most of the studies on the consequences of information and communication technology (ICT) have been focused on US aggregate data. In contrast to these studies, this paper empirically assesses the industrial effect of ICT investment on three key variables – real output, employment, and labour productivity – in some European Union-15 (EU-15) countries and the USA using panel-vector autoregression models. An increase in ICT investment is positive for the economies of these countries, giving rise to larger growth in real output, employment, and labour productivity at the industrial level. The pattern of responses to changes in ICT investment is quantitatively diverse across most of the EU-15 countries studied and in the two types of industries considered (i.e. ICT-intensive and less intensive industries). Moreover, the positive impact on labour productivity in ICT-intensive industries is larger after the mid-1990s, with the USA being the most positively affected country.     

Evidence on the impact of R&D and ICT investments on innovation and productivity in Italian firms

Both research and development (R&D) and information and communication technology (ICT) investment have been identified as sources of relative innovation underperformance in Europe vis-à-vis the USA. In this article, we investigate the R&D and ICT investment at the firm level in an effort to assess their relative importance and to what extent they are complements or substitutes. We use data on a large unbalanced panel data sample of Italian manufacturing firms constructed from four consecutive waves of a survey of manufacturing firms, to estimate a version of the CDM model of R&D, innovation, and productivity [Crépon–Duguet–Mairesse 1998. Research, innovation and productivity: An econometric analysis at the firm level. Economics of Innovation and New Technology 7, no. 2: 115–58] that has been modified to include ICT investment and R&D as the two main inputs into innovation and productivity. We find that R&D and ICT are both strongly associated with innovation and productivity, with R&D being more important for innovation, and ICT investment being more important for productivity. For the median firm, rates of return to both investments are so high that they suggest considerably underinvestment in both these activities. We explore the possible complementarity between R&D and ICT in innovation and production, but find none, although we do find complementarity between R&D and worker skill in innovation.     

Canada–US productivity gap: The role of competition intensity differential

The relative lack of competitive pressure in product markets and lower investment in both fundamental and applied innovation are among the potential factors that have been put forward to explain Canada’s weak productivity performance with respect to the US. Since competition is generally seen as the single leading catalyst for fundamental and applied innovation, this paper analyzes the role of product market competition in the Canada–US productivity level gap. We develop an empirical framework in which competition exerts both direct and indirect effects on productivity, with the indirect impact coming through fundamental and applied innovation. We find statistically significant evidence that the competition intensity differential (between Canada and the US) has contributed to the Canada–US productivity level gap directly, as well as indirectly through lower investment in both R&D activities and M&E (including ICT) investment. We also find statistically significant evidence that Canada’s relatively poor performance in both productivity and M&E (including ICT) investment have acted as a self-reinforcing mechanism, which further causes detriment to the country’s productivity.     

Are ICT Spillovers Driving the New Economy?

Some observers have raised the possibility that production spillovers and network effects associated with information and communications technology (ICT) are an important part of the "New Economy." Across U.S. manufacturing industries, however, ICT capital appears correlated with the acceleration of average labor productivity (ALP) growth as predicted by a standard production model, but not with total factor productivity (TFP) growth as these New Economy forces imply. Once one allows for productivity differences across industries, measured TFP growth is uncorrelated with all capital inputs, including ICT capital. This provides little evidence for a New Economy story of ICT-related spillovers or network effects driving TFP growth throughout U.S. manufacturing.     

Innovation and productivity in manufacturing and service firms in Catalonia: a regional approach

This article analyses the determinants of research and development (R&D) and the role of innovation on labour productivity in Catalan firms. Our empirical analysis found a considerable heterogeneity in firm performances between the manufacturing and service industries and between low- and high-tech industries. The frontiers that separate manufacturing and service industries are increasingly blurred. In Catalonia high-tech knowledge-intensive services (KIS) play a strategic role in promoting innovation in both manufacturing and service industries, and driving growth throughout the regional economy. Empirical results show new firms created during the period 2002–2004 that have a greater R&D intensity than incumbent firms (54.1% in high-tech manufacturing industries and 68.8% in high-tech KIS). Small and young firms in the high-tech KIS sector are very prone to carrying out R&D and they invest more in innovation projects. R&D expenditures, output innovation, investment in physical capital, market share and export have positive effects on labour productivity in both the manufacturing and service sectors. Firm size, on the other hand, has a positive effect on productivity in manufacturing industries but not in services.     

ICT效应下外商直接投资、经济增长与能源消耗 ---基于半参数空间向量自回归模型的研究

基于中国30个省份面板数据,通过构建半参数空间向量自回归模型（SSPVAR）,利用时空脉冲响应函数、偏导图探讨了经济增长、能源消耗及外商直接投资的时空传导效应与信息与通讯技术（ICT）非线性的影响作用。研究结果显示：外商直接投资、经济增长及能耗强度受到彼此冲击后的响应较为明显;能耗强度具有自强化效应,空间溢出作用促进了周边省份经济发展,短期内不利于其外资引入,但长期却能提高外资利用。经济发展产生不可持续的自身累积效应,与单位产值能耗走在了“U”的上行区,但却对邻近区域产生了积极的正向溢出。外资长期利好效应凸显,发挥经济发展和能源节约的促进作用;短期内却抑制经济发展,强化能耗度,更无法发挥“示范”效应吸引更大规模的外资流入。ICT具有正向的节能、增产和引流效应,分别以倒V和V型形态推进,但是发展的初级阶段却没有任何影响作用。加速ICT应用,智能化和信息化商业、生产模式转型将有助于更少能耗的经济高质量发展。     

ECONOMIC PERFORMANCE AND PUBLIC INFRASTRUCTURE: AN APPLICATION TO GREEK MANUFACTURING

To comprehend the impact of public infrastructure on economic performance this paper provides a measure of productivity growth as derived from duality theory. This productivity growth is decomposed into the components of technical change, returns to scale and the effects of public infrastructure, the variable of our interest. In an application, we opt for Greek manufacturing so as to investigate whether the decline in its growth rate is partly explained by public infrastructure. Despite some variation in the estimation results of shadow shares across industries, public infrastructure asserts a cost saving effect in most industries, though it also appears that traditional labour‐intensive industries with lower level of technological advancement do not benefit from the provision of public infrastructure. The estimation results further demonstrate that while public infrastructure enhanced productivity growth over the sample period for most industries, low infrastructure investment in the 1970s and the 1980s undermined productivity growth.     

Broad-based intangibles as generators of growth in Europe

This paper analyzes broad performance-based measures of intangibles in European Union countries to find new sources of growth and shows that intangible capital (IC)-driven growth was halted in European industries during the 2008–2013 financial crisis period. Much of this IC, such as purchased organizational, research and development (R&;D) and information and communication technology capital, is unaccounted for in systems of national accounts, so that total IC investment is 29.6% of value added, with R&;D having the lowest gross domestic product share at 5.0%. On average, deteriorating IC growth has decreased labor productivity by ?2.9% annually. Policies fostering multifactor productivity growth have been strongly biased and have ignored the loss of those skills necessary for long-term growth. During 2008–2013, innovation thus failed to compensate for Europe’s dwindling fixed-capital-intensive manufacturing and job losses, but broad-based IC offers a roadmap for recovery by relying on an increasing role for IC-producing services.     

Productivity Gains and Spillovers from Offshoring

Offshoring is generally believed to be productivity enhancing and this belief is underpinned by economic theory. This paper estimates the impact of materials and business services offshoring on productivity in Belgium over the period 1995–2004. It contributes to the literature: (i) by examining this issue separately for manufacturing and market services industries and (ii) by investigating the possibility of forward and backward spillovers from offshoring, i.e. that productivity gains from offshoring feed through to upstream and downstream industries. Results show that materials offshoring has no effect on productivity, while business services offshoring leads to productivity gains in manufacturing. Furthermore, there is no evidence of either forward or backward spillovers from offshoring.     

The relationship between R&D,investment and patents: a panel data analysis

This paper estimates the effect of research and investment activities on patents across countries, industries and over time, using Poisson and negative binomial distribution models. The first result of the paper is the recognition of the importance of investment activities in contributing to technical change. The positive role of research expenditures is also confirmed but its elasticity is found to be lower than in previous studies. Important differences across sectors emerge: research expenditures are found to be more effective in generating patents in science based industries, while investment is particularly significant in supplier dominated and production intensive industries. Finally, in most sectors, the estimated R&D and investment coefficients lie outside the confidence intervals calculated around the pooled coefficients.     

The economic contribution of the “C” in ICT: Evidence from OECD countries

Numerous studies have documented the contribution of ICT to growth. Less has been done on the contribution of communications technology, the “C” in ICT. We construct an international dataset of fourteen OECD countries and present contributions to growth for each ICT asset (IT hardware, CT equipment and software) using alternative ICT deflators. Using each country’s deflator we find that the contribution of CT capital deepening to productivity growth is lower in the EU than the US. Thus we ask: is that lower contribution due to a lower rate of CT investment or differing sources and methods for measurement of price change? We find that: (a) there are still considerable disparities in measures of ICT price change across countries; (b) in terms of growth-accounting, price harmonisation has a greater impact on the measured contributions of IT hardware and software in the EU relative to the US, than that of CT equipment; over 1996–2013, harmonising investment prices explains just 15% of the gap in the EU CT contribution relative to the US, compared to 25% for IT hardware; (c) over 1996–2013, CT capital deepening accounted for 0.11% pa (6% as a share) of labour productivity growth (LPG) in the US, compared to 0.03% pa (2.5% of LPG) in the EU-13 when using national accounts deflators; and (d) using OECD harmonised deflators, the figure for the EU-13 is raised to 0.04% pa (4% of LPG).     

The shift to services employment: A review of the literature

This paper provides an overview of literature on the employment shift towards services. It follows the three dimensions of structural change: inter-industry productivity differences, the inter-industry division of labor (outsourcing), and shifts in final demand. It concludes that the third dimension gained importance over the last decades although differential productivity growth continued to contribute to the rise of service employment as well. Outsourcing of service tasks from manufacturing industries increased but cannot explain much of the rise in service-industry employment over time. The shift to services is not just a price effect nor is it mainly the effect of the outsourcing of service activities from manufacturing industries. The shift to services is real.     

Information and Communications Technology as a General-Purpose Technology: Evidence from US Industry Data

Abstract. Many people point to information and communications technology (ICT) as the key for understanding the acceleration in productivity in the United States since the mid-1990s. Stories of ICT as a 'general-purpose technology' suggest that measured total factor productivity (TFP) should rise in ICT-using sectors (reflecting either unobserved accumulation of intangible organizational capital; spillovers; or both), but with a long lag. Contemporaneously, however, investments in ICT may be associated with lower TFP as resources are diverted to reorganization and learning. We find that US industry results are consistent with general-purpose technology (GPT) stories: the acceleration after the mid-1990s was broad-based – located primarily in ICT-using industries rather than ICT-producing industries. Furthermore, industry TFP accelerations in the 2000s are positively correlated with (appropriately weighted) industry ICT capital growth in the 1990s. Indeed, as GPT stories would suggest, after controlling for past ICT investment, industry TFP accelerations are negatively correlated with increases in ICT usage in the 2000s.     

Engines of growth. Innovation and productivity in industry groups

The diversity of technological activities that contribute to growth in labour productivity is examined in this article for manufacturing and services industries in eight major EU countries. We test the relevance of two “engines of growth”, i.e., the strategies of technological competitiveness (based on innovation in products and markets) and cost competitiveness (relying on innovation in processes and machinery) and their impact on economic performance. We propose models for the determinants of changes in labour productivity and we carry out empirical tests for both the whole economy and for the four Revised Pavitt classes that group manufacturing and services industries with distinct patterns of innovation. Tests are carried out by pooling industries, countries and three time periods, using innovation survey data from CIS 2, 3 and 4, linked to economic variables. The results confirm the specificity of the two “engines of growth”; economic performances in European industries appear as the result of different innovation models, with strong specificities of the four Revised Pavitt classes.     

Short- and long-run heterogeneous investment dynamics

In this paper, we model the dynamics of business investment taking into account asset-specific characteristics potentially affecting the reactivity of aggregate and disaggregate capital accumulation over the business cycle. We estimate Information and Communication Technologies (ICTs) and traditional investment (non-ICT) determinants within a Vector Error Correction Model testing the assumptions of the flexible accelerator and neoclassical model as well as the role of financial constraints and uncertainty. We evaluate our model on Italian data over the period 1980–2012, and we check our results also with Spanish and UK data. Our findings support the assumption that capital is heterogeneous since short- and long-run determinants are significantly different across the assets. Traditional assets experience stock adjustment costs while ICT investment incurs flow adjustment cost. In the short run, liquidity is a key determinant of investment independently of the asset type. In the long run, uncertainty significantly affects ICT. Finally, the results of the counterfactual exercises support the idea that ICT is a key policy variable to foster economic growth.     

ICT growth effects at the industry level: A comparison between the US and the EU

This is an empirical study on the growth impact of Information and Communication Technologies using industry-level data for the US and the EU industries over the period 1980-2000. A panel data approach is employed to estimate the ICT effect using the system GMM and the pooled mean group panel data estimators. The results vary depending on the period, the region, and the type of industry considered. The GMM estimates suggest a significant ICT effect on growth during the 90s both in the US and in the EU. This effect for the EU was strong in the early 90s and weakened afterwards, as opposed to the US where it strengthened in the late 90s. The results of the pooled mean group estimator confirm that the long run growth contribution of ICT was significantly positive in the industries of both regions and over the entire period 1980-2000. However, it seems that the productivity effects of ICT are mainly present in the industries which are either ICT producers or heavy ICT users.     

Technological and non-technological innovation and productivity in services vis-à-vis manufacturing sectors

In this paper, the links between investment in innovation activities, innovation outputs (technological and non-technological innovation) and productivity in services vis-à-vis the manufacturing sector are explored using innovation survey data from Uruguay. The size of firms, their cooperation in R&D activities, the use of public financial support, patent protection and the use of market sources of information are very important drivers of the decision to invest in innovation activities across sectors. The main determinants of technological and non-technological innovations are the level of investment in innovation activities and the size of the firm. The results indicate that both technological and non-technological innovations are positively associated to productivity gains in services, but non-technological innovations have a more important role. The reverse happens for manufacturing, where technological innovations are more relevant for productivity.