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Transcript of Economic Impact of ICT - World Banksiteresources.worldbank.org/EXTINFORMATIONAND... · sector...
What Causes Economic Growth?
• The Right Culture (1900)?• Investment in Capital (1950s)?• Investment in People (1970s)?• The Right Policies (1980s)?• The Right Institutions (1990s)?• The Right Culture (2000s)?
Whatever It Is, It Isn’t Just Investment
-6
-4
-2
0
2
4
6
8
10
12
14
0 5 10 15 20 25 30 35 40 45
Decade Investment (% GDP)(Data 1950-90 Across Countries)
Dec
ade
GD
P G
row
th (%
)
But Technology Has a Large Role
0
2
4
6
8
1958 1962 1966 1970 1974 1978 1982 1986 1990
Rep. of Korea
Ghana
Thousands of 1985 international dollars
Difference attributed to knowledge
Difference due to physical and human capital
Teledensity and Income
y = -0 .20 94x2 + 5 .0228x - 25 .283R 2 = 0 .814
-4
-3
-2
-1
0
1
2
3
4
5
5 .5 6 .5 7 .5 8 .5 9 .5 10 .5
Lo g GDP pe r c apita (199 7)
Log
Mai
nlin
es p
er 1
00 (1
997)
S ie rra Le one
C ongo , De m . R e p
C ha d
C a m b od ia
Gu ine a
Ye m e n , R e p .
Mo ngo lia
Aze rg a ija n
Moldova
C e n tra l Africa n R e p ub licS u da n
C a m e roon
Nige r
Ma urita n ia
Indon e s iaS ri La nka
Ga bon
Bots wa na
Gu a te m a la
Tha ila ndMe xico
S a u d i Ara b iaGe org ia
Ukra ine
Arm e n ia
Ma ce d on ia
JJ a m a ica
Zim ba bwe
La tviaBu lga ria
Lithua n ia
Es to n ia
Be la rusC h ile
Hunga ry
Gre e ce
Kyrgyz R e p .
S we de n
IT Production
0.54
0.81
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Abo
ve T
rend
TFP
Gro
wth
Cyclical Effects Trend from Durable Manufactures
Even Skeptics See US Impact (Gordon, 2000)
ICT: An Engine of Growth?Sources of Labor Productivity Growth
1995-2000
-4-20246
US
German
y
Malays
ia
Philipp
ines
Thaila
nd
ICT Investment and ICT Production TFP Other Factors
• US: ICT Investment and Production TFP accounts for 53 percent of productivity growth.• In Malaysia and Thailand growth would have been significantly negative without ICT
The Mystery of ICT Capital
Output = Yt = TFPt*F(Kt,Lt)• Investment in ICT has grown dramatically
over the past ten years, this investment has expanded Kt
• The evidence of a TFP impact from ICT use is mixed
• Production of ICT adjusted for hedonic gains has had an impact on TFPt… but this accrues to consumers
OECD Benefits from ICT UseICT Spending and TFP Growth in the OECD
-1
0
1
2
3
4
5
2 4 6 8 101992 Nominal ICT Spending/GDP
1991
-7 T
FP G
row
th
E-Choupals –Internet Access and Rural Livelihoods
• ITC used the Internet to re-engineer the supply chain of their soybean business in rural India
• ITC saves US$ 5 and the farmer saves a similar amount on each transaction
• For the first year ITC estimated a 2% total savings in production costs associated with their soybean business and a similar boost in profit due to enhanced quality
Telecoms as a driver of private-sector investment
• Total investment in telecoms in Sub-Saharan Africa was $13.9bn 2001-2005
• In 2003, Total investment in telecoms in Sub-Saharan Africa = 27% of total FDI and 0.8% of GDP
0.0
5.0
10.0
15.0
20.0
25.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year
US
$, b
illio
ns
Total FDI inSub-Saharan Africa (SSA) Telecom PPI in SSA
Liberalization Drives Investment and Access
Telecom Leads Private Investment in MNA Infrastructure
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1998 1999 2000 2001 2002 2003 2004 2005
Priv
ate
Inve
stm
ent i
n Te
leco
m (%
of T
otal
Priv
ate
Inve
stm
ent i
n In
fras
truc
ture
)
Private Participation in Telecom Projects Attracted over $13 billion in MNA 2000-2004
Private Participation in Telecom Projects in MNA is a high % of Private Participation in Infrastructure Projects
Private Investment in Telecom is Important in MNA 2000 - 2004
0
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
Private investment in telecoms Foreign direct investment, net inflows
Cur
rent
US$
Links to Economic Growth
An increase of 10mobile phones per 100 people boosts GDP growth by 0.6%
A 1% increase in the number of Internet users increases total exports by 4.3%
Countries with better Information Infrastructure have higher GNP per Capita Growth
0
1
2
3
Telecoms SectorUnderdeveloped Given
GDP per Capita
Telecoms SectorAdvanced Given GDP per
Capita
GNP per Capita Growth Rate
GN
P p
er C
apita
G
row
th R
ate
Less DevelopedInformation
Infrastructure
More DevelopedInformation
Infrastructure
1.9%
2.6%
Source: GICT MNA Working Paper (2003)
ICT, Firm Competitiveness, Economic Growth: Empirical
Evidence
Effect of ICT Use on Enterprise Performance in Developing Countries Indicator Enterprises that
do not use ICT Enterprises that do use ICT
Difference
Sales growth (%) 0.4 3.8 3.4 Employment growth (%) 4.5 5.6 1.2 Profitability (%) 4.2 9.3 5.1 Labor Productivity (value added per worker in USD)
5,288 8,712 3,423
Total Factor Productivity (%) 78.2 79.2 1
ICT Creates New Jobs
105
115
125
135
145
2003 2004 2005 2006 2007 2008
Thou
sand
s
IT-Related Employment in South East Europe
Between 2003 and 2008 there is
growth of 32,000 new IT jobs
Source: IDC IT Economic Impact Study, 2005, 6 South East European Countries
BulgariaCroatiaMacedoniaRomaniaSloveniaSerbia and Montenegro
ICT Growth and Taxes
$400
$500
$600
$700
$800
$900
$1,000
2003 2004 2005 2006 2007 2008
IT-Related Tax Revenues
An aggregate of $432 million in
new tax revenues over 5 years
Personal & Social TaxesCorporate Income Taxes
VAT
Source: IDC IT Economic Impact Study, 2005, 6 South East European Countries
BulgariaCroatiaMacedoniaRomaniaSloveniaSerbia and Montenegro