1 Information and Communication Technologies (ICT) and the Transformation of the Economy Andrew Wyckoff and Dirk Pilat Organisation for Economic Co-operation.

1

Information and Communication Technologies (ICT) and the

Transformation of the Economy

Andrew Wyckoff and Dirk PilatOrganisation for Economic Co-operation and Development

Paris, France

US Department of Commerce Transforming Enterprise ConferenceWashington, DC 27 January 2003

2

Diffusion of ICTDrawn from “Measuring the Information

Economy” 2002

www.oecd.org/sti/measuring-infoeconomy

3

ICT investment has been uneven

0

5

10

15

20

25

30

1980 1990 2000

% of non-res. GFCF

4

Recent ICT Investment: US

Source: US BEA, NIPA Tables.

Contributions to % change in quarterly real private fixed investment by type

-15

-10

-5

0

5

10

15

20

1995

-I

199

5-III

199

6-I

1996

-III

1997

-I

199

7-III

199

8-I

1998

-III

1999

-I

199

9-III

200

0-I

2000

-III

2001

-I

200

1-III

2002

-I

2002-

III

Structures

Non-ICT equipment

Information processing equipment + software

5

Business Access to and Use of the Internet

0

20

40

60

80

100

%Businesses using the Internet

Businesses receiving orders over the Internet

Businesses ordering over the Internet

6

Explaining differences in ICT diffusion and use across the OECD

7

Skills: The availability of high-skilled workers is associated with higher investment in ICT

Luxembourg*

Finland

Spain

Austria

United Kingdom

Netherlands

BelgiumDenmark

Germany

Italy

Greece

United States

France

Sweden

0

1

2

3

4

5

6

0 1 2 3 4

Share of high-skilled ICT workers in total occupations

ICT

inve

stm

ent (

%G

DP

)

Correlation = 0.68T-statistic = 3.04

8

Regulations: Employment protection legislation may limit required organisational change

Australia

Austria

Belgium

Canada

Denmark

Finland

FranceGermany Greece

Ireland

ItalyJapan

Netherlands

PortugalSpain

Sweden

United Kingdom

United States

0

5

10

15

20

25

30

35

0 1 2 3 4

Employment protection legislation index

ICT

inve

stm

ent (

%G

FCF)

Correlation = -0.61T-statistics = -3.07

9

Co-invention: ICT investment is accompanied by further innovation in applications and software

Austria

Belgium

Denmark

France

Germany

GreeceIreland

Italy

Netherlands

PortugalSpain

Sweden

United Kingdom

Australia

Canada

Finland

Japan

United States

0

5

10

15

20

25

30

35

0 10 20 30 40 50

Share of ICT patents in total

ICT

inve

stm

en

t (%

GF

CF

)

Correlation = 0.73T-statistic = 4.21

10

3 Perspectives on the impacts of ICT on performance

– Macroeconomic contribution of ICT investment to Output Growth;

– Industry Improvement of Labour Productivity;

– Competitive gains by individual firms.

11

Contribution of ICT investment to business GDP

0.0

0.2

0.4

0.6

0.8

1.0

Contribution to growth of business GDP (%)

1990-95

1995-2000

1224

Contribution to Productivity by ICT-Producing Manuf.

0.00

0.20

0.40

0.60

0.80

1.00

Contribution to labour productivity growth

(%)

1990-95

1996-2000

13

Contribution to Productivity by ICT-using services

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Contribution to labour productivity growth

(%)1990-95 1996-2000

Countries where productivity growth deteriorated

Countries where productivity growth improved

14

Micro-data Analysis

15

Firm-level Canada

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1 2 3 C1 C2 C3 C4

Technology group

Lab

ou

r p

rod

uct

ivit

y re

lati

ve t

o n

on

-use

rs

1988 1997

Source: Baldwin & Sabourin, 2002

16

The sophistication of e-activity increases with experience in ICT use: UK

0

5

10

15

20

25

30

35

40

pre 1995 1995 1996 1997 1998 1999 2000

Year that company first started using ICT

Cu

rre

nt

lev

el o

f E

-ac

tiv

ity

Buy using E-commerceSell using E-commerce Buy & sell using E-commerce

Source: Clayton & Waldron, 2002

17

The impacts of ICT differ across OECD countries

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Low/0 Low/Low High/0 Low/High High/Low High/High

Investment group (total/ICT)

Pro

du

cti

vit

y r

ela

tive t

o n

o i

nvestm

en

t

United States

Germany

Source: Haltiwanger, Jarimin & Schank, 2002.

18

Stylised Facts Emerging from OECD Microdata Consortia

Human Capital Industrial Structure Organisational Change Ownership Change Innovation

19

Policy implications

The business environment matters……in particular, the level and nature of competition.

Investing in ICT is much more than hardware. It involves a constellation of complimentary investments.

ICT is both a tool for innovation.