ICEG EICEG European uropean Center Center
The ICT Sector and Economic Growth:Some Thoughts on the NMS Countries
Pál GáspárPál Gáspár
Presentation at the Annual Conference of IDATE, in Presentation at the Annual Conference of IDATE, in Monpellier, 24 November 2004Monpellier, 24 November 2004
ICEG European Center, www.icegec.org
The Structure of presentation
I. ICT and growth : the main contributing factors
II. Experiences of the NMS
III. Policies to enhance ICT contribution to growth in NMS
I. ICT and growth : the main contributing factors
ICEG European Center, www.icegec.org
Contribution of the ICT sector to growth
The three main channels :• Investments in ICT sector lead to capital deepening and more
productive use of capital,• Technical progress in the ICT sector leads to inceasing TFP in ICT-
producing sectors • Increase in overall TFP through spill-overs, network effects and
overall efficiency gains
Distinction between:• Contribution of ICT producing, ICT-using and non-ICT sectors differs • contribution of ICT manufacturing and services within ICT producing
and using sectors differs
ICEG European Center, www.icegec.org
Looking at individual factors
A. Investments in the ICT sector:• - Investments in ICTcreated in advanced countries an annual GDP
growth of between 0.3% and 0.8% according to OECD (2003)• - US: ICT investment in total is 30% in Europe 17%.
B. Increase in ICT sector:• Some countries have very strong ICT sectors that contribute
significantly to the GDP growth (annual contribution in Korea, Ireland and Finland: approximately 1%).
• Gordon: ICT production matters, not the diffusion (presence of few very active producers in IT)
• Daveri (04) in Finnland what mattered was not the ICT usage, but the driving force was the ICT production.(Nokia)
ICEG European Center, www.icegec.org
Looking at individual factors
C. Increase of TFP creates economic growth:• Jorgenson-Ho-Stiroh(02): productivity growth due to ICT capital accummulation in
several industries, • ICT usage matters Blanchard (03), Art-Inklar-vaGuckin (03), McKinsey Global Institute
(02), Stiroh (03). • The major difference between the USA and the EU is in Y/L in retail, banking and
wholesale,
D. Other factors or the ones that help to realize the productivity advances:
• Retail sector: competition what matters and not IT in accelerating Y/L growth,• McKinsey-report: organizational change accompanying IT investments and deepening
matters, • Gordon : increase in IT I increases Y/L not everywhwere and not in each industry,• Bailey : not all IT investment but process management, better softwares, and
improvement in workplace organizations
II. Experiences of the NMS with ICT Sector and Economic Growth
ICEG European Center, www.icegec.org
The Spread of ICT use in NMS
ICT Market value in Euro, 2003
0
200
400
600
800
1000
1200
1400
1600
RO TR BG LT PL LV SK EE HU CZ MA SL EU-15
ICEG European Center, www.icegec.org
The contribution of the ICT Sector to GDP
ICT sector in GDP
0
5
10
15
20
25
LA PL SK RO LI CZ EU.15 HU BG SLO EE MA
ICEG European Center, www.icegec.org
Features of ICT Sector Contributiton
A. ICT contributed mainly to TFP growth through the spread of ICT sector
- ICT producing sectors 5%, using 26% and non-ict 68% in the Eu in 2003, in HU 7%, 25% and 68%, CZ 4%,24%,72% and PL 2%,24%,74%
B. Factors of ICT contribution• labor cuts and TFP drove productivity increases,• its direct productivity contribtuion in NMS equals EU-15,• less contribution via the increase of TFP or ICT capital intensity, • in most countries worse indicators in case of use • indirect effects are weak: organisaitonal changes due to ICT, increase
use of ICT in the busienss and housholds sector contributes far less than in the EU
ICEG European Center, www.icegec.org
Future Policies Issues
• encourage FDI and I in ICT sectors especially in those countries where the comparative advantages are present (general investment climate)
• create more competition by easing entry conditions and progressing with deregulation,
• support faster increase in services and ICT use besides manufacturing: access (costs), content (eGovernment) and technology (broadband)
• make steps to improve current position in key Lisbon indicators
ICEG European Center, www.icegec.org
Labour Productivity
Labour Productivity, 2003, EU-15=100
0
20
40
60
80
100
120
BG RO TR LV LT EE PL ACC-13 NMS SK CZ HU SI CY MT EU-15
ICEG European Center, www.icegec.org
Employment Rates
Employment rates, %
0
10
20
30
40
50
60
70
80
TR PL BG MT HU RO SK ACC-13
NMS LV LT EE SI EU-15 CZ CY
ICEG European Center, www.icegec.org
R+D Expenditures
R+D expenditures (in % of GDP)
0
0,5
1
1,5
2
2,5
CY RO LV BG PL EE TR LT SK ACC-13 HU CZ SI EU-15
THANK YOU FOR YOUR ATTENTIONTHANK YOU FOR YOUR ATTENTION
PÁL GÁSPÁRPÁL GÁSPÁRDirectorDirector
14 Korompai Street 14 Korompai Street H-1124 BudapestH-1124 Budapest
Tel: +36-1-248-1160Tel: +36-1-248-1160Fax: +36-1-248-1161Fax: +36-1-248-1161
E-mail: [email protected]: [email protected] site : www.icegec.orgWeb site : www.icegec.org
Top Related