the contribution of ict to the economy & economic growth phillippa biggs, economist, itu mcit,...
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The Contribution of ICT to the Economy & Economic Growth
Phillippa Biggs, Economist, ITUMCIT, Cairo, Egypt10 March 2009
2
1.Questions & Definitions
2.Contribution to the Economy- ICT Sector Value-Added of Business VA- IT spending as % GDP- Telco revenues as % GDP
3.Contribution to Economic Growth
4.Contribution to Productivity
5.Conclusions
Agenda
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ICT is widely recognized as a strategic sector in its own right. But what does that really mean?
• Weight of ICT sector in the economy, in terms of value-added & employment;• Contribution of ICT sector to GDP growth and labor productivity;• Evolution of the sector in turnover and VA;• Trade balance of ICT products and services.
Key Questions
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•Body of work ongoing since at least 1997 by OECD Working Party on Indicators for the Information Society (WPIIS)
•June 1997 – meeting to define ICT sector•1998 – An agreed definition•2002 – definition revised, taking into account
wholesale ICT products•2006-7 – revision & adoption by UNSD•Eurostat – Task Force and Unit F6.
Ongoing work on Definitions
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“The ICT sector can be viewed as the activities that fall into the union of IT & telecom activities. It includes intersections between them & info content [but] excludes information content activities falling outside intersections – i.e. those with no direct ICT association”.
Concepts inICT Sector Definition
telecommunications
IT Information content
transmissionnetworking
onlineoffline
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The ICT sector comprises the manufacturing and distribution of IT and telecommunication goods and production of ICT services.Services:
- 5151 Wholesale of computers, equipment & software
- 5152 Wholesale of electronic & telecom equipment- 6420 Telecommunications- 7123 Renting of office machinery & equipment- 7200 Computer & related activities
OECD Definition of ICT Sector (2002, revised)
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Manufacturing:- 3000 Office, accounting & computing machinery- 3130 Insulated wire & cable- 3210 Electronic valves, tubes & other components - 3220 TV & radio transmitters & apparatus- 3230 TV & radio receivers, sound & video recording- 3312 Instruments & appliances for measuring,
checking, testing, navigating & other purposes- 3313 Industrial process equipment
ICT Sector Definition (cont’d)
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% ICT Value-added in Business VA
Source: OECD Information Technology Outlook 2008.
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Share ICT VA in Total VA,%, 2003
Source: EUROSTAT/EC Directorate of Ec & Regional Statistics
0%1%2%3%4%5%6%7%8%9%
10%
Finlan
dUK
Hunga
ry
Estonia
Franc
e
Austri
aIta
ly
Slovak
ia
Spain
Portu
gal
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% ICT Value-added in GDP, 2004
Source: IPTS/REDICT, based on Eurostat & EU-KLEMS.
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% IT Spending in GDP, EITO 2007
Source: EITO, 2007.
0.00.51.01.52.02.53.03.54.04.5
Sw
ed
en
Sw
itze
rla
UK
Ne
the
rla
De
nm
ark
Fin
lan
dF
ran
ceC
zech
Ge
rma
ny
Est
on
iaB
el/L
ux
Au
stri
aE
uro
pe
EU
N
orw
ay
Hu
ng
ary
Po
lan
dS
lova
kia
La
tvia
Slo
ven
iaB
ulg
ari
aR
om
an
iaP
ort
ug
al
Italy
Lith
ua
nia
Ire
lan
dS
pa
inG
ree
ce
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Telco Revenues as % GDPSpain, CMP
France, ARCEP
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What Are We Not Measuring?% Telco Revenues as % GDP over
time
Source: Deutsche Bank
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•Different sources used – need to harmonize for consistent & coherent data.
•Data availability, quality and timeliness•Confidentiality?•Confirm current definition of ICT sector
based on NACE Rev 1.1•Review for future definitions of ICT sector
(e.g. NACE Rev. 2 CPA 2008).•Relation to other international classifications.
Problems
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•OECD WPIIS.•Eurostat ICT Sector Statistics Project – to
establish cooperation with Member States, Commission and IOs.
•Bring ICT statistics into line with policy work e.g. the Lisbon Strategy, Commission’s 2010 benchmarking in Europe.
Ongoing work
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•Dynamic growth accounting problem, attributing causation.
•BUT large amount of endogeneity or circular causation – is it the growth that results in investment in ICTs, or is it the investment in ICTs that is driving economic growth?
•Answer – both!•‘Normal’ input or are there additional
spillover effects?
Contribution of ICTs to Economic Growth
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Links to Economic Growth
An increase of 10 mobile 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)
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Sources of GDP Growth, 1990-2003
Source: Qiang (2008), World Bank IC4D 2009.
Growth effects of ICT
0.43
0.730.6
0.81 0.77
1.121.21
1.38
0
0.5
1
1.5H
igh
Lo
w &
mid
dle
Hig
h
Lo
w &
mid
dle
Hig
h
Lo
w &
mid
dle
Hig
h
Lo
w &
mid
dle
fixed mobile Internet Broadband
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Sources of GDP Growth, 1990-2003
Source: UNCTAD Information Economy Report 2007.
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& Productivity?
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•Historically, these studies have focused on numbers (PCs, phones, telephone lines) and failed to take account of network effects, which are likely to be sizeable.
•Structural shifts in 1995 and/or 2001/2002?•Is a PC today really comparable with a PC
from pre-1999?•Critical mass effects – some argue that ICTs
have significant impact near to zero/low penetr’n; others that impact of ICTs is more powerful close to universal service – difficult to resolve.
Problems
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Thank [email protected]