ICT Benefits

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CAPITALS

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INTRODUCTION TO ICT POLICY DISCUSSIONS Rene Summer

ICT BENEFITS

mailto:[email protected]

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text in the footer area ICT BENEFITS | Public | © Ericsson AB 2014 | 2014-04-25 |

ICT BENEFITS AS WE COMMONLY Quantify THEM TODAY

+ 1000 BB USERS > + 80 Jobs

+ 10% POINTS BB PENETRATION

> + 1% POINT GDP

+ 2 x BB SPEED > + 0.3% increase in GDP

+1% POINT increase in BB Penetration

> 3,5% INCREASE IN new business registration

Sources: Chalmers Institute of Technology, Arthur D Little,

Stockholm School of Economics

EXAMPLES OF FINDINGS OF ECONOMIC IMPACT OF ICT

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ICT Benefits as we commonly know them today

ICT BENEFITS

MARKET GROWTH

PRODUCTIVITY INNOVATION

INVESTMENTS

JOB/NEW BIZ

CREATION TRADE

EFFICIENCY

Source: Economic Benefits of ICT

http://ictlogy.net/20080115-economic-benefits-of-icts

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Sources: Chalmers Institute of Technology, Arthur D Little,

OECD Broadband and the Economy, Future of Internet 2008

Increased global market reach

expanding trade but also

intensified competition,

General increase in economic

efficiency and labor productivity,

Increased pace of knowledge

diffusion and increased positive

spill-over effects,

Revised view of the role of

innovation (innovation-led

growth).

Economic Impact of ICT Changing Economic Thinking > ICT

Source: Jati Sengupta, Understanding Economic Growth, Springer 2011

DIRECT INDIRECT INDUCED

ICT BENEFITS AS WE COMMONLY UNDERSTAND THEM TODAY

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ICT BENEFITS AS WE WILL RECOGNIZE THEM IN THE NETWORKED SOCIETY

WELL BEING

STANDARD

OF LIVING

QUALITY

OF LIFE

SOCIAL

PROGRESS

NATIONAL

COMPETITIVENESS

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Increase in market size

Increase in investments

Technological progress

Causes of LONG TERM ECONOMIC growth

TECHNOLOGICAL PROGRESS IS BY DEFINITION A NET

IMPROVEMENT TO THE ECONOMY*

* Source: Economist Joel Mokyr, The Levers of Riches.

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Relative significance of Technological progress

CAUSING LONG TERM GROWTH

Imagine if we freeze technology, say at some point of the Victorian era

WHERE WOULD WE BE TODAY IN TERMS OF WELL-BEING?

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technological progress

Growth Change

INNOVATION INVENTION DIFFUSION & ADOPTION

KEY COMPONENTS OF A TECHNOLOGY CHANGE

incremental, radical and disruptive innovations

ECONOMIC PERFORMANCE Evolutionary

micro-innovations

Revolutionary

macro-innovations

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Technology Revolutions macro innovations of special kind

Source: Professor Carlota Perez Universities of Cambridge, Tallinn and Sussex

Single generic and

recognizable

1771- The industrial revolution

1829- Steam, coal, iron & railways

1875- Steel & heavy engineering

1908- Automobile, oil, mass production

1971- IT & telecommunication

FIVE SUCCESSIVE TECHNOLOGICAL REVOLUTIONS 1770 TO 2000S

GENERAL PURPOSE TECHNOLOGIES (GPT)

Broad scope of improvement

Wide range and variety of use

Abundant spillovers

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Transformational power of technological Progress:

Source: World Economic Forum, Global

Competitiveness Report 2010-11

Characteristics of a factor-

driven economy

Source: Jati Sengupta, Understanding Economic Growth, Springer 2011, OECD Broadband and the

Economy, Future of Internet 2008; Lipsey, Richard; Kenneth I. Carlaw & Clifford T. Bekhar, Oxford

Press 2005; Brynjolfsson, Erik, and Adam Saunders (2010) MIT Press and Ericsson Analysis

BASIC REQUIREMENTS › Institutions › Infrastructure › Macroeconomic environment › Health and primary education

DIRECT IMPACT › Availability and quality of ICT Infrastructure › Digital Readiness

Characteristics of a efficiency-

driven economy

EFFICIENCY ENHANCERS › Higher education and training › Goods market efficiency › Labor market efficiency › Financial market development › Technological readiness › Market size

INDIRECT IMPACT FROM ICT › Improving development of human capital, e-

education › Increased access to knowledge › Increasing market efficiency/ reach e-commerce › Increase efficiency in existing processes/value

chains

Characteristics of an

Innovation- driven economy

INNOVATION & SOPHISTICATION › Business sophistication › Innovation

INDUCED IMPACT ICT › Decreasing barriers to creating of new knowledge

(inventions) › Decreasing barriers to innovation in new

products, services, processes, and markets

COMPETITIVENESS OF NATIONS IMPACT FROM ICT

ICT AS TRANSFORMATIONAL GPT

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Mastering transformations

Source: Manuel Castells, The Rise of the Network Society, Second Edition, 2010

IS A STRATEGIC SOCIETAL CAPABILITY

Technology (or lack of it) embodies the capacity of societies to transform themselves

The ability or inability of societies to master technology largely shapes their economic destiny and social well-being

The state can suffocate or enable an accelerated process of technological transformation

UNTAPPED OPPORTUNITIES CHANGE

TIME

Institutions (Governance)

MARKET

Technology

Growth Opportunities

Reform Opportunities

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Why policy makers need to act?

Benefits are

not automatic

No deterministic built

in design in to

technology

There are also

challenges that

must be addressed

Which shapes the size

and sustainability of

benefits

Must be backed

by resilient &

adequate policy

Technology can’t

do it alone

WELL BEING

FIRM AND DURABLE POLICY COMMITMENT CAN DELIVER STRUCTURAL CHANGE WITH LASTING BENEFITS

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› Quantifying

› Knowing

› Understanding

› Long view, broad & deep change as a source of value creation

› Technological progress as a cause of long term growth

› ICT = GPT

› Transformational power of GPT

› Long term gains are not automatic

Summary

ICT BENEFITS FUNDAMENTALS

A STRATEGIC UNDERSTANDING OF ICT BENEFITS

ICT Benefits

News & Politics

Transcript of ICT Benefits