Transcript Links to Economic Growth

The Contribution of ICT to the
Economy & Economic Growth
Phillippa Biggs, Economist, ITU
MCIT, Cairo, Egypt
10 March 2009
Agenda
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
2
Key Questions
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.
3
Ongoing work on Definitions
• 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.
4
Concepts in
ICT Sector
Definition
telecommunications
networking transmission
online
IT
offline
Information content
“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
5
– i.e. those with no direct ICT association”.
OECD Definition of ICT Sector
(2002, revised)
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
6
ICT Sector Definition (cont’d)
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
7
% ICT Value-added in Business VA
Source: OECD Information Technology Outlook 2008.
8
Share ICT VA in Total VA,%, 2003
al
rtu
g
Po
ai
n
Sp
ak
ia
ly
Sl
ov
Ita
st
ria
Au
ce
Fr
an
ia
to
n
Es
ar
y
un
g
U
K
H
Fi
nl
an
d
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Source: EUROSTAT/EC Directorate of Ec & Regional Statistics
9
% ICT Value-added in GDP, 2004
Source: IPTS/REDICT, based on Eurostat & EU-KLEMS.
10
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Sweden
Switzerla
UK
Netherla
Denmark
Finland
France
Czech
Germany
Estonia
Bel/Lux
Austria
Europe
EU
Norway
Hungary
Poland
Slovakia
Latvia
Slovenia
Bulgaria
Romania
Portugal
Italy
Lithuania
Ireland
Spain
Greece
% IT Spending in GDP, EITO 2007
Source: EITO, 2007.
11
Telco Revenues as % GDP
Spain, CMP
France, ARCEP
12
What Are We Not Measuring?
% Telco Revenues as % GDP over time
Source: Deutsche Bank
13
Problems
• 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.
14
Ongoing work
• 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.
15
Contribution of ICTs to Economic
Growth
• 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?
16
Links to Economic Growth
A 1% increase in the
number of Internet
users increases total
exports by 4.3%
3
GNP per Capita
Growth Rate
An increase of 10
mobile phones per
100 people boosts
GDP growth by
0.6%
Countries with better Information Infrastructure
have higher GNP per Capita Growth
Less Developed
Information
Infrastructure
More Developed
Information
Infrastructure
2.6%
1.9%
2
1
0
Telecoms Sector
Underdeveloped Given
GDP per Capita
Telecoms Sector
Advanced Given GDP per
Capita
GNP per Capita Growth Rate
Source: GICT MNA Working Paper (2003)
17
Sources of GDP Growth, 1990-2003
Growth effects of ICT
1.5
1.38
0.73
0.81
0.77
High
1
Low &
middle
1.12
1.21
0.6
0.5
0.43
fixed
mobile
Internet
Low &
middle
High
Low &
middle
High
Low &
middle
High
0
Broadband
Source: Qiang (2008), World Bank IC4D 2009.
18
Sources of GDP Growth, 1990-2003
Source: UNCTAD Information Economy Report 2007.
19
& Productivity?
20
Problems
• 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.
21
Thank you
[email protected]
22