The Impact of Information and Communication Technologies on Economic Growth in
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The Impact of Information and Communication Technologies on Economic Growth in Latin America in International Perspective. Nauro F. Campos Centre for Economic Development and Institutions Brunel University, CEPR and IZA. For presentation at the

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Nauro f campos centre for economic development and institutions brunel university cepr and iza

The Impact of Information and Communication Technologies on Economic Growth in Latin America in International Perspective

Nauro F. Campos

Centre for Economic Development and Institutions

Brunel University, CEPR and IZA

For presentation at the

Digital Transformations in the Information SocietyConference

Geneva, June 2006


Brief project overview

Brief Project Overview

  • Part of a large research project trying to measure digital divide, focus on LAC

  • United Nations Economic Commission for Latin America (all opinions are mine)

  • Teams working on

    Growth Accounting

    Possible firm-level

    TICness indicators

  • Here: macro impact of TIC (LAC vs. World)


Research questions

Research Questions

  • What is the impact of ICT on growth in LAC?

  • Is this impact smaller in LAC than in other regions of the world (OECD, Asia, Eastern Europe, Africa)?

  • Has the impact of ICT on Latin American growth changed since 1960?


Broadly related literature

Broadly Related Literature

  • Evidence from labour economics, e.g. Dolton and Makepeace (EJ 2004)

  • Evidence from firm-level studies, e.g. Brynjolfsson and Hitt (REStat 2003) 

  • Evidence from growth accounting, e.g. Jorgenson (Handbook Econ Growth 2005)

  • Focus here is on TIC’s growth payoff using aggregate production function framework


Closely related literature

Closely Related Literature

1963: Jipp, A., “Wealth of Nations and Telephone Density,” Telecomm Journal

1980: Hardy, A., “The role of the telephone in economic development,” Telecomm Policy

15 DCs + 45 LDCs, phones yes radios no,

no effects on split samples

1991: Cronin et al., “Telecommunications Infrastructure and Economic Growth: An Analysis of Causality,’ Telecomm Policy

Feedback system (annual data)


Closely related recent literature

Closely Related Recent Literature

2001: Röller and Waverman (AER)

Reverse causality, OECD countries

2004: Sridhar and Sridhar (WIDER conf)

Extend RW; find impact smaller in LDCs

2004: Teltscher and Korka (Infodensity ITU)

147 countries; ICT elasticity btw .1/.3

2005: Waverman, Mescchi and Fuss (TPRC conf)

Impact of ICT on growth larger in LDCs


Lessons from recent literature what are desirable next steps

Lessons from Recent LiteratureWhat are desirable next steps?

  • DATA: PANEL

  • PANEL ESTIMATION

  • ENDOGENEITY

  • POOLABILITY

  • ICT COMPOSITE and INSTITUTIONS


What have we done in this project

What have we done in this project?

  • DATA: PANEL: put together extensive panel data set: 170 countries, 1960 to 2005 (5-year avgs), 42 ICT indicators

  • ESTIMATION: exploit panel aspect, std & endogenous growth model (Islam, QJE 1995)

  • ENDOGENEITY: exploratory Granger-causality

  • POOLABILITY: supports runs by individual regions


Poolability issues

Poolability issues

  • 153 countries; 5-year averages since 1960 (9 periods max); 1110 observations

  • Can we pool the data?

  • Is the model for OECD the same as for Africa? Are the coefficients the same?

  • The answer for our data is that you should NOT pool all data together…

  • … but you can pool by region!

  • OECD, LAC, MENA, Asia, Africa, TEs


Endogeneity concerns

Endogeneity concerns

  • 150 countries; 5-year averages since 1960

  • Fixed and mobile penetration

  • Granger-causality tests:


Baseline results fixed effects

Baseline results (fixed-effects)


Baseline results cont

Baseline results (cont)


Baseline results lac only

Baseline results (LAC only)


Summary of regression results

Summary of regression results

Aggregate production model:

OECD only fixed (>LAC)

LAC fixed and mobile

Asia fixed and mobile (>LAC)

AFRICA fixed and mobile (<LAC)

MENA only fixed

TEs fixed and mobile (<LAC)


Endogenous growth model

Endogenous growth model


Endogenous growth model cont

Endogenous growth model (cont)


Summary of regression results1

Summary of regression results

Endogenous growth model:

OECD weak for mobile

LAC only fixed

Asia only fixed (>LAC)

AFRICA only mobile

MENA only mobile


Conclusions

Conclusions

  • ICT have large impact on growth even in the poorest countries

  • Impact seems robust: different regions

  • Impact seems robust: reverse causality


Extensions

Extensions

  • Institutions? Adequate investment climate, regulatory framework and economic reforms seem necessary to growth and will be incorporated

  • An aggregate indicator of TICness


Ict indicators

ICT Indicators

  • Standard measures: fixed phone lines and mobile phone lines penetration

  • A composite indicator capturing the multi-faceted nature of ICT is desirable

  • An index of TICness?


Tic ness index

TICness Index

  • 140 countries; 3 points in time: 1990-1994, 1995-1999 and 2000-2004

  • Goal-post method, equal weights

  • Six underlying variables:

    • mobile penetration (per capita)

    • import of telecom equip (%GDP)

    • outgoing international calls (per capita)

    • Internet hosts (per capita)

    • price of internet connection

    • high-technology exports (%GDP)


Nauro f campos centre for economic development and institutions brunel university cepr and iza

Thank you


Existing ict indicators

Existing ICT Indicators


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