Transcript ICT is Closely Related to Economic Growth

Contribution to economic growth through ICT
Octorber, 2009
Ministry of Internal Affairs and Communications, JAPAN
ICT is Closely Related to Economic Growth
○Statistically, the development of ICT is closely correlated with economic growth.
e.g.) The relationship between the ICT competitiveness index and per-capita GDP, the relationship between the ICT investment ratio and per-capita GDP,
and the relationship between the ICT investment growth rate and GDP growth rate.
○High-income countries position the ICT industry as an industrial pillar.
e.g.) In countries placed high in the per-capita GDP rankings (e.g. Nordic countries), the ICT industry generally accounts for a large portion of the economy
and is growing strongly.
ICT investment ratio and growth rate
The growth rate of ICT investment is correlated with the real GDP growth rate.
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Correlation coefficient＝0.72
Real GDP growth rate (%; average for the period
1988-2004)
6
5
4
Japan
3
2
1
2
4
6
8
10
12
Growth rate of ICT investment (%; average for the period 1988-2004)
14
9
6
5
7
6
5
6
9
5
3
6
7
(Source) Statistical data compiled by the WEF, the IMF and the OECD
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It is important to clarify the channels that link ICT with economic growth
○The correlation between ICT and economic growth could be merely superficial. It is essential to clarify the channels
that link the two.
○The following are three major channels that link ICT with economic growth.
(1)Economic power: An increase in the input of factors of production (capital, labor, etc.) and a rise in productivity
(2)Intellectual power: Accumulation of human capital
(3)Social power: Accumulation of social capital
Three channels that link ICT with economic growth
Through three channels, Economic power, Intellectual power, and Social power ICT contributes to economic growth.
Investment in ICT
Empowerment
（ａ）
Factors of production (capital, labor, etc.)
(information capital, non-information capital, high-skilled labor, low-skilled labor, etc.)
Productivity
Innovation (R&D)
ICT
Economic
power
（Ａ）
(innovation, process improvement, etc.)
Growth
Database building
（ｂ）
Human capital
(knowledge, information, education, personnel, etc.)
Intellectua
l power
（Ｂ）
Social
power
（Ｃ）
ICT-empowered education
Information disclosure
（ｃ）
Social capital
(Local community networks, governance, etc.)
Online community
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1. Economic power: Contribution to growth through a productivity rise, accumulation of information capital and
support for the labor force
(1)The accumulation of information capital through ICT investment contributes to growth by increasing productivity.
ICT also makes teleworking possible and contributes to growth by encouraging the social participation of childrearing parents and elderly people and by supporting the labor force.
(2)Improved efficiency through the introduction of new ICT contributes to growth by increasing productivity.
2. Intellectual power: Contribution to growth through accumulation of human capital(knowledge, information,
education, personnel)
(1) ICT-empowered education and sharing of knowledge and information based on the utilization of ICT promote the
accumulation of human capital.
(2)The enhancement of human capital has acted as the main driving force behind economic growth in recent years.
3. Social power: Contribution to growth through accumulation of social capital(governance and local community
networks)
(1) The strengthening of local community networks and an improvement of governance based on the utilization of ICT
promote the accumulation of social capital.
(2) The enhancement of human and social capital has acted as the main driving force behind economic growth in
recent years.
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The basic idea of competition policy on ICT field
○Competition policy that ICT field contributes to economic growth
(1)An appropriate balance shall be paid between facility based competition where each carrier builds its own networks
such as lines and the like, and service based competition where dominant carriers are forced to make their bottleneck
facilities available to competitive carriers to provide services.
(2)Attention shall be paid to a method for assuring fair competition in response to the diffusion of the vertically
integrated business model which crosses different layers.
(3)The principles relating to network neutrality for ensuring competition neutrality and technology neutrality are to be
kept in mind for policy development.
Promotion of investment
・Business investment
・Personnel development
・Research development
Sound competition
Maintenance of competitive environment
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Reference
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A drastic acceleration of ICT investment will be the key to economic regeneration
○We estimated the impact of a drastic acceleration of ICT investment on Japan’s economic growth in the 2010s by
using medium- and long-term economic forecast simulations based on macroeconometric modeling.
○As a result, we found that if ICT investment is accelerated drastically, the Japanese economy is highly likely to raise
average real growth almost 1% in the 2010s.
○However, it is essential for Japan to tackle challenges boldly amid the recession in order to restore ICT investment
to the growth trends seen in the 1980s.
Real GDP rate in the 2010s by the acceleration of ICT investment
A drastic acceleration of ICT investment is indispensable to achieve average real growth over 2% in the 2010s.
(%)
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Baseline scenario
Accelerated investment scenario
Accelerated ICT investment scenario
2.5
2.4
2.5
2.2
2.3
2.2
2.1
2
1.7
1.6
1.5
1.5
1
0.5
0
2011-15
2016-20
2011-20
*Baseline scenario: This assumes that the global economy, which is rapidly slipping into recession, will recover moderately in fiscal 2010.
Accelerated investment scenario: This assumes, in addition to the assumption of the baseline scenario, that private-sector corporate capital expenditures will start growing sharply (average rise of 5 percentage points during the 2010s) in fiscal 2010
because of drastic investment promotion measures.
Accelerated ICT investment scenario: This assumes, in addition to the assumption of the accelerated investment scenario, that the ratio of ICT investment to private-sector corporate capital expenditures will rise (average rise of approximately 2
percentage points during the 2010s) because of aggressive measures to promote ICT investment.
(Source) Survey on the Impact of ICT Investment and the accumulation of ICT-related Capital on the Japanese Economy by the Ministry of Internal Affairs and Communications
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ICT is Closely Related to Economic Growth
ICT investment and per-capita GDP
Share of the ICT industry and growth rate
Countries in which the ICT industry has a large share of the economy
generally enjoy high real economic growth.
The ICT investment ratio is correlated with per-capita GDP.
40
Correlation coefficient＝0.54
8
Correlation coefficient＝0.79
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Per-capita nominal GDP
(1,000 US$; purchasing-power parity; 2004)
Real GDP growth rate (%; average for the period
1995-2007)
7
6
5
4
3
2
Japan
1
0
5
6
7
8
9
10
11
ICT industry’s share of added value created in the business sector (%; 1995)
Japan
30
25
20
15
5
10
15
20
25
30
ICT investment ratio (%; 2004)
12
(Source) Statistical data compiled by the WEF, the IMF and the OECD
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Intellectual power: Contribution to growth through accumulation of human capital(knowledge, information,
education, personnel)
●Increased access to the Internet promotes the creation of new knowledge
and information.
●The accumulation of knowledge and information boosts economic growth.
1.2
0.14
The number of science and technology
research papers per 1,000 people (2005)
Concerning knowledge and information
×
0.8
0.6
Japan
0.4
0.2
International data
0.0
-0.2
0
10
20
30
Internet subscription ratio (%; 2007)
40
50
Per-capita real GDP growth rate
(controlled for initial values and other factors)
Correlation coefficient＝0.88
1.0
Level of significance 1%
0.13
Japan
0.12
0.11
0.10
0.09
International data
0.08
0.07
0.06
0.0
1.0
2.0
3.0
4.0
5.0
The number of science and technology research papers (logarithm/per 10 people)
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Social power: Contribution to growth through accumulation of social capital(governance and local community
networks)
●Increased access to the Internet promotes information disclosure and
legal compliance.
Correlation coefficient＝0.80
2.0
Governance index (2002)
Concerning governance
×
1.0
Japan
0.0
-1.0
International data
-2.0
Per-capital real GDP economic growth rate
(controlled for initial values and other factors)
3.0
●A rise in the governance index boosts economic growth.
0.13
Level of significance 1%
0.12
Japan
0.11
0.10
0.09
0.08
International data
0.07
0.06
0.05
-3.0
0
10
20
30
40
The Internet subscription ratio (%; 2007)
50
60
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
Governance index
*The governance index is compiled by the World Bank based on six indicators: (1) democratization, (2) political stability/non-violence, (3) government effectiveness, (4) regulatory quality, (5) rule of law and (6) control of corruption).
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