Nauro F. Campos Centre for Economic Development and Institutions Brunel University, CEPR and IZA
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Transcript of Nauro F. Campos Centre for Economic Development and Institutions Brunel University, CEPR and IZA
The Impact of Information and Communication Technologies
on Economic Growth in Latin America in International
Perspective
Nauro F. CamposCentre for Economic Development and Institutions
Brunel University, CEPR and IZA
For presentation at the
Digital Transformations in the Information Society Conference
Geneva, June 2006
Brief Project Overview
• Part of a large research project trying to measure digital divide, focus on LAC
• United Nations Economic Commission for Latin America (all opinions are mine)
• Teams working onGrowth AccountingPossible firm-level TICness indicators
• Here: macro impact of TIC (LAC vs. World)
Research Questions
• What is the impact of ICT on growth in LAC?
• Is this impact smaller in LAC than in other regions of the world (OECD, Asia,
Eastern Europe, Africa)?
• Has the impact of ICT on Latin American growth changed since 1960?
Broadly Related Literature
• Evidence from labour economics, e.g. Dolton and Makepeace (EJ 2004)
• Evidence from firm-level studies, e.g. Brynjolfsson and Hitt (REStat 2003)
• Evidence from growth accounting, e.g. Jorgenson (Handbook Econ Growth 2005)
• Focus here is on TIC’s growth payoff using aggregate production function framework
Closely Related Literature 1963: Jipp, A., “Wealth of Nations and Telephone
Density,” Telecomm Journal
1980: Hardy, A., “The role of the telephone in economic development,” Telecomm Policy
15 DCs + 45 LDCs, phones yes radios no,no effects on split samples
1991: Cronin et al., “Telecommunications Infrastructure and Economic Growth: An Analysis of Causality,’ Telecomm Policy
Feedback system (annual data)
Closely Related Recent Literature
2001: Röller and Waverman (AER) Reverse causality, OECD countries
2004: Sridhar and Sridhar (WIDER conf)Extend RW; find impact smaller in LDCs
2004: Teltscher and Korka (Infodensity ITU) 147 countries; ICT elasticity btw .1/.3
2005: Waverman, Mescchi and Fuss (TPRC conf)
Impact of ICT on growth larger in LDCs
Lessons from Recent LiteratureWhat are desirable next steps?
• DATA: PANEL
• PANEL ESTIMATION
• ENDOGENEITY
• POOLABILITY
• ICT COMPOSITE and INSTITUTIONS
What have we done in this project?
• DATA: PANEL: put together extensive panel data set: 170 countries, 1960 to 2005 (5-year avgs), 42 ICT indicators
• ESTIMATION: exploit panel aspect, std & endogenous growth model (Islam, QJE 1995)
• ENDOGENEITY: exploratory Granger-causality
• POOLABILITY: supports runs by individual regions
Poolability issues
• 153 countries; 5-year averages since 1960 (9 periods max); 1110 observations
• Can we pool the data?• Is the model for OECD the same as for
Africa? Are the coefficients the same? • The answer for our data is that you
should NOT pool all data together…• … but you can pool by region! • OECD, LAC, MENA, Asia, Africa, TEs
Endogeneity concerns
• 150 countries; 5-year averages since 1960
• Fixed and mobile penetration
• Granger-causality tests:
coefficient
[p-value]
Fixed lines
penetration
Mobile lines
penetration
TIC to Growth? .001
[0.140]
.003
[.001]
Growth to TIC? 1.01
[0.540]
-5.37
[0.462]
Baseline results (fixed-effects)
(1) (2) (3) (4) (5)
Capital 0.132*** 0.140*** -0.0201 0.165*** -0.0254
[0.043] [0.043] [0.039] [0.042] [0.039]
Population -0.197*** -0.175*** -0.485*** -0.144*** -0.114***
[0.035] [0.033] [0.033] [0.032] [0.025]
Leg. Effectiveness -0.00215 -0.00168 -0.00044 -0.00074 -0.00031
[0.0022] [0.0021] [0.0016] [0.0017] [0.0015]
OECD 1.209*** 1.165*** 0.464** 1.144*** 0.422**
[0.22] [0.20] [0.19] [0.20] [0.18]
Latin America -0.067 -0.061 -0.112 -0.0589 -0.105
[0.22] [0.21] [0.19] [0.21] [0.17]
Asia -0.471* -0.504** -0.176 -0.519** -0.173
[0.25] [0.23] [0.20] [0.23] [0.18]
Transition -0.103 -0.0879 -0.312 -0.0981 -0.383**
[0.24] [0.23] [0.21] [0.23] [0.19]
Africa -1.402*** -1.349*** -0.593*** -1.323*** -0.541***
[0.22] [0.21] [0.21] [0.21] [0.19]
Baseline results (cont)
(1) (2) (3) (4) (5)
Mobile penetration 0.0209***
[0.0034]
Fixed penetration 0.351***
[0.023]
Mobile per capita 0.0923***
penetration [0.010]
Fixed per capita 0.371***
penetration [0.022]
Constant 10.67*** 10.31*** 11.71*** 9.768*** 9.779***
[0.65] [0.60] [0.52] [0.60] [0.47]
Time dummies? Yes Yes Yes Yes Yes
Observations 1110 1110 1035 1110 1035
Number of countries 153 153 153 153 153
R-squared 0.6328 0.6544 0.7972 0.6660 0.8155
Baseline results (LAC only)
Mobile penetration 0.0137**
[0.0068]
Fixed penetration 0.362***
[0.051]
Mobile pc penet 0.101***
[0.037]
Fixed pc penet 0.356***
[0.050]
Constant 9.605*** 9.486*** 10.45*** 9.292*** 8.791***
[0.85] [0.77] [0.66] [0.79] [0.62]
Time dummies? Yes Yes Yes Yes Yes
Observations 214 214 188 214 188
Number of countries 24 24 24 24 24
R-squared 0.0924 0.1139 0.6306 0.1229 0.6240
Summary of regression results
Aggregate production model:
OECD only fixed (>LAC)
LAC fixed and mobile
Asia fixed and mobile (>LAC)
AFRICA fixed and mobile (<LAC)
MENA only fixed
TEs fixed and mobile (<LAC)
Endogenous growth model(1) (2) (3) (4) (5)
Initial income -0.0114*** -0.0133*** -0.0185*** -0.0115*** -0.0186***
[0.0022] [0.0023] [0.0033] [0.0022] [0.0033]
Capital 0.0362*** 0.0366*** 0.0355*** 0.0364*** 0.0356***
[0.0043] [0.0042] [0.0047] [0.0043] [0.0047]
Population -0.00069 -0.0012 -0.0061*** -0.00064 -0.0003
[0.00087] [0.00088] [0.0021] [0.00085] [0.00088]
Human capital 0.00183 0.00290* 0.00129 0.00216 0.00128
[0.0015] [0.0015] [0.0018] [0.0015] [0.0018]
Leg. Effectiveness 0.000328** 0.00035*** 0.000340** 0.000333** 0.000339**
[0.00014] [0.00014] [0.00015] [0.00014] [0.00015]
OECD 0.0275*** 0.0259*** 0.0242*** 0.0269*** 0.0243***
[0.0072] [0.0069] [0.0069] [0.0070] [0.0069]
Latin America 0.00356 0.00251 0.00196 0.00327 0.00196
[0.0065] [0.0064] [0.0064] [0.0064] [0.0064]
Asia 0.0174*** 0.0152** 0.0176*** 0.0170*** 0.0176***
[0.0063] [0.0061] [0.0061] [0.0061] [0.0061]
Transition 0.0229** 0.0199** 0.0218** 0.0220** 0.0219**
[0.0097] [0.0097] [0.0093] [0.0094] [0.0094]
Africa -0.00662 -0.00742 -0.00312 -0.0065 -0.00319
[0.0068] [0.0067] [0.0069] [0.0066] [0.0069]
Endogenous growth model (cont)
Mobile penetration 0.00140***
[0.00031]
Fixed penetration 0.00580***
[0.0018]
Mobile pc penet 0.000552**
[0.00089]
Fixed pc penet 0.00582***
[0.0018]
Constant 0.0124 0.0328 0.0924** 0.0112 0.0657*
[0.025] [0.026] [0.041] [0.025] [0.035]
Time dummies? Yes Yes Yes Yes Yes
Observations 829 829 780 829 780
Number of countries 105 105 105 105 105
R-squared 0.3626 0.3816 0.3927 0.3647 0.3925
Summary of regression results
Endogenous growth model:
OECD weak for mobile
LAC only fixed
Asia only fixed (>LAC)
AFRICA only mobile
MENA only mobile
Conclusions
• ICT have large impact on growth even in the poorest countries
• Impact seems robust: different regions
• Impact seems robust: reverse causality
Extensions
• Institutions? Adequate investment climate, regulatory framework and economic reforms seem necessary to growth and will be incorporated
• An aggregate indicator of TICness
ICT Indicators
• Standard measures: fixed phone lines and mobile phone lines penetration
• A composite indicator capturing the multi-faceted nature of ICT is desirable
• An index of TICness?
TICness Index
• 140 countries; 3 points in time: 1990-1994, 1995-1999 and 2000-2004
• Goal-post method, equal weights
• Six underlying variables: – mobile penetration (per capita)– import of telecom equip (%GDP)– outgoing international calls (per capita)– Internet hosts (per capita)– price of internet connection– high-technology exports (%GDP)
0
0.05
0.1
0.15
0.2
0.25
oecd lac asiamenaafricaoecd lac asiamenaafricaoecd lac asiamenaafricaoecd lac asia 1990-94 mena africa
Thank you
Existing ICT Indicators
ArCo DAI DOI EIU IKS KEI NRI Orbicom TAI UNCTAD UNPAN WBICT
Index Name
Technology
Capabilities for
Countries
Digital Access Index
Digital Opportunity
Index
e-readiness ranking
Index of Knowledge
Societies
Knowledge Economy
Index
Network Readiness
IndexInfostate
Technology Achieveme
nt Index
Index of ICT
Diffusion
E-Government Readiness
Index
ICT Index
Publisher Archibugi
& CocoITU ITU
Economist Intelligence Unit (EIU)
UN Department
of Econ &Social Affairs
World Bank Institute
World Economic
ForumOrbicom UNDP UNCTAD
UN Division
PAN World Bank
Pub date 2003 Dec-03 2005 April 2005 2005 2005 March 2005 2003 2001 2005 Nov. 2004 2005
Countries 162 178 40 65 45 128 104 139 72 165 191 144
Variables 8 8 11 ~100 14 80 51 19 8 11 8 15
Subjective variables
No No No Yes** No Yes* Yes* No No Yes** Yes** No
# publications
1 1 1 6 1 NA 4 2 1 2 3 1
Data year 2000 2002 2003 No mention No mention 2003 No mention 2001 1995-2000 2002 2000-2002 2004
Historical comparisons
1990, 2000
1998 & 2002 for
40 countries
No
Previous year; index
has been changed
No1995, latest
data
Previous year; index has changed
Scores provided for 1996-2001
NoRankings for 1995,
1999-2002
Previous year;
methodology changed between 1
and 2 publication
No