The effects of ICT* on output per worker

In this paper, we explore the short-run and long-run contribution of five indicators of information and communication technology (ICT*) on economic growth of China over the sample period 1980-2013. We use the augmented Solow (1956) framework, the ARDL bounds (Pesaran, Shin, & Smith, 2001) approach to cointegration and the Toda and Yamamoto (1995) granger non-causality tests to examine the possible linkages. The results show evidence of long-run association among level variables for all the indicators of ICT*. From the results, we also note that all the indicators of ICT* have a positive and statistically significant elasticity coefficient ranging from 0.010 to 0.080. From the Granger causality results, we note bidirectional causality between mobile cellular, telecommunication and economic growth; and between mobile cellular, telecommunication and capital per worker, respectively. Other results indicate that fixed broadband cause capital accumulation; capital accumulation causes internet technology. We also note bidirectional causality between mobile cellular and telecommunication, and between fixed broadband and internet, respectively; and a unidirectional causality from internet and fixed broadband to hi-tech exports; and from mobile cellular and telecommunication to fixed broadband, respectively. From the overall results, within caveats, we highlight that while all the indicators of ICT* are imperative for long-run growth, besides capital per worker, the dominant technology drivers are mobile cellular and telecommunications technology. The contribution of five indicators of ICT on economic growth of China is explored.Results show evidence of long-run association among all ICT indicators and growth.ICT indicators elasticity coefficient range from 0.01 to 0.08.Bidirectional causality between mobile cellular, telecommunication and economic growth is noted.Mobile cellular and telecommunications technology are identified as leading drivers of growth.

[1]  P. Romer.  Increasing Returns and Long-Run Growth , 1986, Journal of Political Economy.

[2]  Mingzhi Li,et al.  New Economy and ICT development in China , 2002, Inf. Econ. Policy.

[3]  Roya Gholami,et al.  Time series analysis in the assessment of ICT impact at the aggregate level - lessons and implications for the new economy , 2005, Inf. Manag..

[4]  J. Xia,et al.  Competition and Regulation in China's 3G/4G Mobile Communications Industry - Institutions, Governance, and Telecom SOEs , 2012 .

[5]  Matti Pohjola,et al.  The roles of electricity and ICT in economic growth: Case Finland , 2008 .

[6]  M. Yorukoglu,et al.  The Information Technology Productivity Paradox , 1998 .

[7]  Herbert G. Thompson,et al.  Mobile, fixed line and Internet service effects on global productive efficiency , 2007, Inf. Econ. Policy.

[8]  Mark C. Strazicich,et al.  Minimum Lagrange Multiplier Unit Root Test with Two Structural Breaks , 2003, Review of Economics and Statistics.

[9]  Gary Madden,et al.  CEE telecommunications investment and economic growth , 1998 .

[10]  Stephen D. Oliner,et al.  The Resurgence of Growth in the Late 1990s: Is Information Technology the Story? , 2000 .

[11]  Dimitrios Buhalis,et al.  Digital Divide in Tourism , 2010 .

[12]  Khuong M. Vu,et al.  Information and Communication Technology (ICT) and Singapore's economic growth , 2013, Inf. Econ. Policy.

[13]  Pantelis Koutroumpis,et al.  The economic impact of broadband on growth: A simultaneous approach , 2009 .

[14]  F. Cronin,et al.  Telecommunications and growth: The contribution of telecommunications infrastructure investment to aggregate and sectoral productivity , 1993 .

[15]  Jing Zhang,et al.  Promoting green ICT in China: A framework based on innovation system approaches , 2012 .

[16]  Mary O'Mahony,et al.  Quantifying the Impact of ICT Capital on Output Growth: A Heterogeneous Dynamic Panel Approach , 2005 .

[17]  Kazuyuki Motohashi,et al.  Information Technology and the Japanese Economy , 2005 .

[18]  B. Bhaskara Rao,et al.  Estimates of the Steady State Growth Rates for Selected Asian Countries with an Extended Solow Model , 2008 .

[19]  P. Narayan,et al.  The saving and investment nexus for China: evidence from cointegration tests , 2005 .

[20]  Arvind Patel,et al.  Accounting for telecommunications contribution to economic growth , 2015 .

[21]  Kjetil Storesletten,et al.  Growing like China∗ , 2008 .

[22]  E. Brynjolfsson,et al.  Computing Productivity: Firm-Level Evidence , 2003 .

[23]  R. Solow.  We’d better watch out , 1987 .

[24]  B. Rao,et al.  Estimating Short and Long Run Relationships: A Guide to the Applied Economist , 2005 .

[25]  R. Solow.  A Contribution to the Theory of Economic Growth , 1956 .

[26]  R. Barro.  Government Spending in a Simple Model of Endogeneous Growth , 1988, Journal of Political Economy.

[27]  J. Xia.  Towards a Sustainable Institutional Arrangement for USOs in China: Current Status, Support Mechanisms, and Regulatory Governance , 2007 .

[28]  Gianfranco E. Atzeni,et al.  ICT productivity and firm propensity to innovative investment: Evidence from Italian microdata , 2006, Inf. Econ. Policy.

[29]  Qing Hu,et al.  Evaluating the impact of IT investments on productivity: a causal analysis at industry level , 2005, Int. J. Inf. Manag..

[30]  S. Ghatak,et al.  The use of the ARDL approach in estimating virtual exchange rates in India , 2001 .

[31]  B. Loo.  Telecommunications reforms in China: Towards an analytical framework , 2004 .

[32]  Hiro Y. Toda,et al.  Statistical inference in vector autoregressions with possibly integrated processes , 1995 .

[33]  J. Xia,et al.  The Third-Generation-Mobile (3G) Policy and Deployment in China: Current Status, Challenges, and Prospects , 2011 .

[34]  Effy Oz,et al.  Information technology productivity: in search of a definite observation , 2005, Inf. Manag..

[35]  P. Narayan,et al.  Size and power properties of structural break unit root tests , 2011 .

[36]  Raul L. Katz.  The economic and social impact of telecommunications output , 2009 .

[37]  Jun Xia,et al.  Linking ICTs to Rural Development: China's Rural Information Policy , 2010, Gov. Inf. Q..

[38]  D. Andrews,et al.  Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis , 1992 .

[39]  K. Stiroh,et al.  Are ICT Spillovers Driving the New Economy? , 2002 .

[40]  K. Kraemer,et al.  : Evidence from , 2022 .

[41]  Dale W. Jorgenson,et al.  Information Technology and the G7 Economies , 2006, Managing in the Information Economy.

[42]  Chun-Yao Tseng,et al.  Technological innovation and knowledge network in Asia: Evidence from comparison of information and communication technologies among six countries , 2009 .

[43]  Khuong M. Vu,et al.  ICT as a Source of Economic Growth in the Information Age: Empirical Evidence from the 1996-2005 Period , 2011 .

[44]  Barry Bosworth,et al.  Accounting for Growth: Comparing China and India , 2007 .

[45]  Francesco Daveri,et al.  The New Economy in Europe (1992-2001) , 2002 .

[46]  Murali Raman,et al.  Whose ICT Investment Matters to Economic Growth: Private or Public? The Malaysian Perspective , 2009, Electron. J. Inf. Syst. Dev. Ctries..

[47]  Fulvio Castellacci,et al.  The dynamics of national innovation systems: A panel cointegration analysis of the coevolution between innovative capability and absorptive capacity , 2013 .

[48]  J. Xia,et al.  Bridging the Digital Divide for Rural Communities: The Case of China , 2008 .

[49]  L. Röller,et al.  Telecommunications Infrastructure and Economic Development: a Simultaneous Approach Forschungsschwerpunkt Marktprozeß Und Unter- Nehmensentwicklung Research Area Market Processes and Corporate Development Abstract Telecommunications Infrastructure and Economic Development: a Simultaneous Approach * , 1996 .

[50]  Sumit Agarwal,et al.  Telecommunications and economic growth: a panel data approach , 2004 .

[51]  Andrew P. Hardy.  The role of the telephone in economic development , 1979 .

[52]  D. Jorgenson,et al.  Raising the Speed Limit: U.S. Economic Growth in the Information Age , 2000 .

[53]  F. Schivardi,et al.  ICT adoption in Italian manufacturing: firm-level evidence , 2005 .

[54]  Arvind Patel,et al.  Exploring the effects of energy consumption on output per worker: A study of Albania, Bulgaria, Hungary and Romania , 2014 .

[55]  Matti Pohjola,et al.  New Economy in Growth and Development , 2002 .

[56]  Khorshed Alam,et al.  Information technology and its changing roles to economic growth and productivity in Australia , 2014 .

[57]  Hwan-Joo Seo,et al.  Does ICT investment widen the growth gap , 2009 .

[58]  Becky P.Y. Loo,et al.  Developing mobile telecommunications to narrow digital divide in developing countries? Some lessons from China , 2012 .

[59]  Bill Lehr,et al.  Information technology and its impact on firm-level productivity: evidence from government and private data sources, 1977-1993 , 1999 .

[60]  Alice Shiu,et al.  Economic growth, telecommunications development and productivity growth of the telecommunications sector: Evidence around the world , 2010 .

[61]  Richard J. Smith,et al.  Bounds testing approaches to the analysis of level relationships , 2001 .

[62]  James G. MacKinnon,et al.  Numerical Distribution Functions for Unit Root and Cointegration Tests , 1996 .

[63]  D. Gollin.  Getting Income Shares Right , 2002, Journal of Political Economy.

[64]  D. Jorgenson.  Information Technology and the U.S. Economy , 2001 .

[65]  Pantelis Koutroumpis,et al.  Mobile Communications: Diffusion Facts and Prospects , 2010 .

[66]  P. Romer.  Endogenous Technological Change , 1989, Journal of Political Economy.

[67]  D. Jorgenson,et al.  Information Technology and the World Growth Resurgence , 2007 .

[68]  S. Johansen,et al.  MAXIMUM LIKELIHOOD ESTIMATION AND INFERENCE ON COINTEGRATION — WITH APPLICATIONS TO THE DEMAND FOR MONEY , 2009 .

[69]  R. Lucas.  On the Mechanics of Economic Development , 1988 .

[70]  Francesco Venturini,et al.  The long-run impact of ICT , 2009 .

[71]  N. Oulton.  ICT and Productivity Growth in the United Kingdom , 2001 .