DRAFTModule 3: Measuring the ICT sector

Ms Sheridan Roberts, ConsultantInformation Society Statistics

Sunday 8 March 2009

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Presentation outline

The ICT sector within the ‘Information society’Size and growth of the ICT sectorStandard international definitions and concepts

OECD definitions – under ISIC Rev 3, Rev 3.1, Rev 4 Partnership on Measuring ICT for Development – core indicators

Progress in measuring the ICT sectorPractical issues for ICT sector measurement

International comparability versus national policy interestsIdentifying and classifying ICT sector unitsDealing with differences between ISIC definitions of the ICT sectorWhat data to collectRatio indicators – which denominator to use

Other information economy classificationsContent and media sectorICT and Content and media products

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Information society conceptual framework

Adapted from OECD Guide to Measuring the Information Society, 2009.

ICT products- definitions, data,

data collection

Content and media- definitions, data, data

collection

Infrastructure- definitions, data,

data collection

ICT supply- definition of ICT sector- entities units scope characteristics- data- data collection

ICT demand- access and use- entities units scope characteristics- interactions between entities- data - data collection

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Estimated size of the ICT sector 2007, US$

Telecom equpt.8.2%

Computer hardware

11.0%

TV services9.6%

Consumer electronics

11.0%

Telecom services35.6%

Software and computer services24.7%

Total ICT Market Worldwide,2007 Value = US$ 3.8 trillion

Global GDP,

92.7%

ICT Sector, 7.3%

Europe30.9%

Asia-Pacif ic24.4%

North America, 32.7%

Rest of the w orld, 12.0%

Adapted from Idate, DigiWorld Yearbook 2008

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Share of ICT value added in business sector value added, OECD, 1995 and 2006

0

4

8

12

16

Finland

Korea (5)

Ireland

Hungary

Sweden (1)

United Kingdom (1)

Netherlands

United States

OECD 23

Norway

EU 14

Denmark

France

Japan (3)

Belgium (5)

Canada

Czech Republic (3,5)

Italy

Australia

Portugal (1,5)

Germ

any (5)

Austria

Spain

Greece (1,3,4,5)

Mexico (2)

%

1995 2006

Source: OECD Key ICT indicators, www.oecd.org/sti/ICTindicators

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OECD definitions of the ICT sector

• The three OECD definitions of the ICT sector have wide acceptance among member and non-member countries

• OECD released the first definition of the ICT sector in 1998, based on ISIC Rev. 3

• It was defined as follows– For manufacturing industries, the products of a candidate

industry: must be intended to fulfil the function of information processing and communication including transmission and display, or must use electronic processing to detect, measure and/or record physical phenomena or to control a physical process.

– For services industries, the products of a candidate industry: must be intended to enable the function of information processing and communication by electronic means.

• The definition was slightly refined (wholesale) with ISIC Rev. 3.1 in 2002.

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OECD definitions of the ICT sector

• With the development of ISIC Rev. 4, OECD redeveloped the definition, which was released in 2007.

• The definition was narrower than the previous definitions– The production (goods and services) of a candidate

industry must primarily be intended to fulfil or enable the function of information processing and communication by electronic means, including transmission and display.

• Note the removal of products that “use electronic processing to detect, measure and/or record physical phenomena or to control a physical process”.

• The OECD 2007 definition is included in ISIC Rev. 4 as an alternative aggregation (as was the 2002 definition in Rev 3.1).

• A rough approximation of the 2007 definition is possible using the ISIC Rev. 3 or Rev. 3.1.

– the approximation removes 3 of the 4-digit ISIC classes from the earlier definitions.

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OECD definitions of the ICT sector

• Main issues– absence of ICT retailing from both definitions– 2007, removal of products that “use electronic

processing to detect, measure and/or record physical phenomena or to control a physical process”

– 2007, removal of manufacture of fibre optic cable– 2007, software publishing has characteristics of

both ICT and ‘content’ but is included in the ICT sector

– 2007, broadcasting has characteristics of both ICT and ‘content’ but is included in the Content and media sector.

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Partnership on Measuring ICT for Development – introduction

Launched: June 2004

Members: ITU, UNCTAD, OECD, UIS, UNECLAC, UNESCWA, UNESCAP, UNECA, Eurostat, the World Bank

Objectives: To identify a common set of core ICT indicators; enhance the ICT statistics capacity of NSOs in developing economies; develop a database of ICT indicators

Structure: Steering Committee and 5 task groups (education, e-government, capacity-building, database development, ICT impacts)

Capacity building: Undertaken by members, independently or through the task group on capacity-building. Activities include training workshops and the production of manuals.

Data dissemination: The Partnership released the first comprehensive compilation of core ICT data in May 2008.

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Partnership core ICT sector indicators

Core indicator Definitions and notes

ICT1 Proportion of total business sector workforce involved in the ICT sector (expressed as a percentage)

ICT workforce (or ICT employment) consists of those persons employed in businesses that are classified as belonging to the ICT sector. Total business workforce represents all persons engaged in domestic production in the business sector. In a national accounts framework, employment can be measured in terms of headcounts, jobs, full-time equivalents (FTE) or hours worked.

For countries using ISIC Rev. 3/Rev 3.1 (or national equivalents), the ICT sector is defined per the OECD’s 2002 definition.

For countries using ISIC Rev. 4 (or national equivalents), the ICT sector is defined per the OECD’s 2007 definition.

ICT2 ICT sector share of gross value added (expressed as a percentage of total business sector gross value added).

Gross value added for a particular industry represents its contribution to national GDP. It is sometimes referred to as GDP by industry and is not directly measured (but is estimated in a national accounts framework). In general, it is calculated as the difference between production (gross output) and intermediate inputs (the energy, materials and services required to produce final output).

Definitions of the ICT and total business sector are per ICT1.

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Global measurement status by level of development, 2008

Deve

lop

ed

Tra

nsiti

on

Deve

lop

ing

Least

deve

lop

ed

Indicator Percentage of economies with each

indicator

Number of economies

with each indicator

% of business sector workforce 67% 37% 15% 0% 57

% of business sector value added 63% 16% 10% 0% 46

Total economies 49 19 120 50 238

Partnership on Measuring ICT for Development, The Global Information Society: A Statistical View 2008

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Practical issues for ICT sector measurement

• International comparability versus national policy interests

– Given the importance of BOTH international comparison and national policy interests, it would be ideal to select a scope and set of data that are able to satisfy both requirements.

• For example, if Egypt wished to include other industries such as broadcasting (ISIC Rev. 4 Division 60) or postal activities (Division 53) that would create a sector that would not be described as an ICT sector for international comparison (which would be a subset of such a sector)….

• …but could provide very useful information for national purposes.

• Terminology is important given the existence of a generally accepted standard.

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Practical issues for ICT sector measurement

• Identifying and classifying ICT sector units– What type of units to include

• usually enterprises or establishments• ideally would include private and public corporations, and

unincorporated units that are ICT producing units.

– Are units already identified and classified for statistical purposes?

– If not, could use ISIC Rev. 4• Units are normally classified according to their

predominant activity (in terms of value added) (ISIC Rev. 4)• Use the detail of ISIC to determine to which class the unit’s

activity belongs.• ISIC Rev. 4 has a lot of useful information on how to

classify units with more than one activity.

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Practical issues for ICT sector measurement

• Dealing with differences between ISIC definitions of the ICT sector

– Rough correspondences will improve comparability.• What data to collect

– Core ICT indicators – gross value added (consisting of a number of items) and employment (numerator and denominator)

– A range of other data possible e.g. capital expenditure, revenue, product details, R&D, innovation, wages and salaries, employment splits (e.g. gender, occupation)

– The unit chosen can affect what data are feasible. • Ratio indicators – denominator

– It is useful to express ICT sector measures as ratios e.g. per OECD and the Partnership core indicators

• using values for the total business sector as the denominator.– The definition of the total business sector, especially for ISIC

Rev. 4 is not straightforward and not entirely resolved.– Generally, it will be a matter of what data are available (a

pragmatic approach).

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Content and media sector

• The OECD 2007 definition of the Content and media sector was developed in parallel with the revised ICT sector definition.

• Like the ICT sector definition, the C&M sector definition is included in ISIC Rev. 4 as an alternative aggregation.

• The definition closely follows ISIC Rev. 4– It consists of industries of Division J of ISIC (Information

and communication) except for those that are already included in the ICT sector definition.

• Main issues– Software publishing has characteristics of both ICT and

‘content’ but is included in the ICT sector.– Broadcasting has characteristics of both ICT and ‘content’

but is included in the Content and media sector.– ISIC Rev. 4 does not separately identify electronic content

activities (industries) so neither does the C&M sector definition.

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Information economy product classifications

• The OECD’s information economy product classifications are based on the UN Central Product Classification Ver. 2, which has just been finalised (31/12/2008)

– they are expected to appear in the final CPC publication as an alternative aggregation.

• There is a classification for ICT products….and one for Content and media products.

• The classifications were developed in parallel with the development of the CPC

– with OECD input into the CPC for ICT services.

• The information economy product classifications were agreed to by OECD member countries at the end of 2008, with minor revisions in January 2009 for late CPC changes (mainly ISIC links).

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ICT products

• Most of the products are from the ICT sector and most ICT sector products are included

– Four ICT sector products are in the Content and media products list.

– There are major differences compared with the 2003 ICT goods classification released by OECD (and used as the basis for the Partnership’s ICT goods trade indicators)

– There is not yet a correspondence between the goods in the ICT products list and the 2007 (or earlier versions) of the WCO Harmonised System for trade statistics.

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ICT products – broad categories

Broad level categories

Number of CPC

subclasses (products)

Computers and peripheral equipment 19 Communication equipment 8 Consumer electronic equipment 11 Miscellaneous ICT components and goods 14 Manufacturing services for ICT equipment 5 Business and productivity software and licensing services

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Information technology consultancy and services

10

Telecommunications services 12 Leasing or rental services for ICT equipment

3

Other ICT services 6 Total 99

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Content and media products

• For the purposes of defining a Content and media products list, the following principle was used:

Content corresponds to an organised message intended for human beings published in mass communication media and related media activities. The value of such a product to the consumer does not lie in its tangible qualities but in its information, educational, cultural or entertainment content.

• For Content and media products, most of the products are from the C&M sector and all C&M sector products are included

– Four Content and media products are linked to the ICT sector (only).

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Content and media products – broad categories

Broad level categories

Number of CPC

subclasses (products)

Printed and other text-based content on physical media, and related services

18

Motion picture, video, television and radio content, and related services

24

Music content and related services 5 Games software 3 On-line content and related services 12 Other content and related services 12 Total 74

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Thank you

•I would be happy to answer any questions

•I can be contacted at SheridanRoberts@InfoSocietyStats.com