22
4th International Conference on „ICT as Drivers of Development in Transition Economies” TIGER, Leon Koźmiński Academy of Entrepreneurship and Management 14 May 2004 The Aggregate Contribution of ICT to Output and Labour Productivity in Transition Economies Marcin Piątkowski TIGER

The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

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Page 1: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

4th

Inte

rnat

iona

lCon

fere

nce

on„I

CT

as D

rive

rsof

Dev

elop

men

tin

Tran

sitio

nE

cono

mie

s”T

IGE

R, L

eon

Koź

miń

skiA

cade

my

ofE

ntre

pren

eurs

hip

and

Man

agem

ent

14 M

ay20

04

The

Agg

rega

teC

ontr

ibut

ion

ofIC

T to

O

utpu

tand

Lab

our

Prod

uctiv

ityin

Tra

nsiti

onE

cono

mie

s

Mar

cin

Piąt

kow

ski

TIG

ER

Page 2: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

Age

nda

Mot

ivat

ion

for r

esea

rch

Res

earc

hhy

poth

eses

Impa

ctof

ICT

on o

utpu

tand

labo

urgr

owth

•IC

T pr

oduc

tion

•IC

T us

e•

Incr

ease

inTF

P in

the

ICT

sect

or•

Spill

over

effe

ctso

fIC

T pr

oduc

tion

and

use

Det

erm

inan

tsof

the

prod

uctiv

eus

eof

ICT

Futu

reim

pact

ofIC

T –

cont

ribut

ion

to g

row

thin

Pola

ndun

til20

25C

oncl

usio

nsan

dpo

licy

reco

mm

enda

tions

Page 3: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

Mot

ivat

ion

for

rese

arch

Lack

ofqu

antit

ativ

ees

timat

esof

the

impa

ctof

ICT

on g

row

thin

trans

ition

econ

omie

sLa

ckof

anal

yses

ofth

epo

tent

ialo

fIC

T fo

r fas

ter

conv

erge

nce

with

deve

lope

dco

untri

esIn

suff

icie

ntun

ders

tand

ing

ofth

eec

onom

ic,

inst

itutio

nal

and

regu

lato

ry

dete

rmin

ants

ofdi

ffus

ion

and

prod

uctiv

eus

eof

ICT

Page 4: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

Res

earc

hhy

poth

eses

ICT

cont

ribut

edto

acc

eler

atio

nin

outp

utan

dla

bour

prod

uctiv

itygr

owth

inse

lect

edtra

nsiti

onec

onom

ies

durin

g19

95-2

001

and

henc

eto

cat

chin

g-up

on th

eEU

-15

coun

tries

ICT

are

likel

yto

be

one

ofth

edr

iver

sof

inco

me

conv

erge

nce

until

2025

th

roug

hst

imul

atio

nof

rest

ruct

urin

gon

the

mac

ro, i

ndus

tryan

dm

icro

leve

lH

igh

leve

lof

deve

lopm

ent

ofth

eec

onom

ic, i

nsitu

tiona

lan

dre

gula

tory

fram

ewor

kis

prer

equi

site

to w

ide

diff

usio

nan

dpr

oduc

tive

use

ofIC

T in

the

trans

ition

econ

omie

s

Page 5: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

Impa

ctof

ICT

on

grow

th

Four

chan

nels

:

I.IC

T pr

oduc

tion,

whi

chdi

rect

lyco

ntrib

utes

to a

nin

crea

sein

the

aggr

egat

eva

lued

adde

dge

nera

ted

inan

econ

omy;

II

.In

crea

sein

tota

lfac

torp

rodu

ctiv

ity(T

FP) i

nth

eIC

T se

ctor

, w

hich

cont

ribut

esto

gro

wth

inag

greg

ate

TFP

inth

ew

hole

econ

omy;

III.

The

effe

ct o

f IC

T in

vest

men

t on

grow

th th

roug

h ca

pita

l de

epen

ing

or su

bstit

utio

nIV

.In

crea

sein

TFP

inno

n-IC

Tpr

oduc

ing

sect

orsd

ueto

sp

illov

eref

fect

sofI

CT

prod

uctio

nan

dus

e

Page 6: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

I. C

ontr

ibut

ion

ofIC

T p

rodu

ctio

nto

G

DP

grow

th19

95-2

001

Page 7: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

And

labo

urpr

oduc

tivity

Page 8: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

II. M

etho

dolo

gy-I

CT

sect

orco

ntri

butio

nto

TFP

gro

wth

Bas

edon

gro

ssou

tput

and

Dom

arw

eigh

tsm

etho

dolo

gy:

Insu

ffic

ient

data

on

indu

stry

-leve

l cap

ital s

ervi

ce in

put

mea

sure

s and

def

lato

rs fo

r bot

h in

put a

nd o

utpu

t=>

TFP

sect

orgr

owth

rate

sin

CEE

and

EU c

ount

riesa

re b

ased

on

data

for t

heU

S IC

T in

dust

ries(

Jorg

enso

net

al.

2002

, Tim

mer

et a

l. 20

03).

Dat

afr

om I/

O ta

bles

for t

he C

EE c

ount

ries i

s not

suff

icie

nt to

ca

lcul

ate

Dom

arw

eigh

ts. H

ence

, iti

sass

umed

that

the

ratio

be

twee

n IC

T se

ctor

val

ue a

dded

and

Dom

arw

eigh

ts fo

r the

EU

-15

is th

e sa

me

for t

he fo

ur C

EE c

ount

ries:

Cze

ch R

epub

lic,

Hun

gary

, Pol

and

and

Slov

akia

Sinc

eno

ne o

f the

CEE

cou

ntrie

s pro

duce

s sem

icon

duct

ors a

nd

mic

ropr

oces

sors

,TFP

gro

wth

rate

sin

CEE

cou

ntrie

s in

“ele

ctro

nic

com

pone

nts”

(mos

tly se

mic

ondu

ctor

s and

m

icro

proc

esso

rs) a

ssum

edto

equ

alth

eTF

P gr

owth

rate

for

“tel

ecom

mun

icat

ions

equ

ipm

ent”

.

Page 9: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

II. I

CT

sect

orco

ntri

butio

nto

ag

greg

ate

TFP

gro

wth

Page 10: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

III.

Met

hodo

logy

-con

trib

utio

nof

ICT

cap

italt

o gr

owth

…G

row

thac

coun

ting

met

hodo

logy

(Pia

tkow

ski,

2003

b):

1.in

vest

men

t ser

ies f

or IC

T ba

sed

on W

ITSA

; for

tota

l in

vest

men

t fro

m W

orld

Ban

k W

DI (

2000

, 200

3) a

nd

com

plem

enta

ry so

urce

s

2.H

arm

oniz

edpr

ice

inde

xfo

r IC

T in

vest

men

tbas

edon

IC

T de

flato

rsfo

r the

US

(Jor

gens

onet

al..

200

3)

3.La

bour

com

pens

atio

nsh

ares

base

don

dat

a fr

omna

tiona

lsta

tistic

tical

offic

espl

us se

nsiti

vity

anal

ysis

Page 11: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

III.

Con

trib

utio

nof

ICT

cap

italt

o G

DP

grow

th

18,8

%0,

460,

840,

460,

812,

42E

U-1

5

23,2

%0,

820,

900,

820,

753,

52U

SA

13,1

%2,

490,

200,

540,

874,

10Sl

oven

ia

13,5

%2,

75-0

,35

0,55

1,15

4,10

Slov

akia

8,3%

2,17

-0,1

70,

09-0

,97

1,12

Rus

sia

28,3

%1,

84-1

,35

0,22

0,08

0,79

Rom

ania

11,5

%2,

050,

230,

551,

984,

81Po

land

19,4

%2,

380,

180,

710,

373,

64H

unga

ry

32,2

%0,

62-0

,28

0,73

1,20

2,27

Cze

ch R

epub

lic

88,4

%1,

55-0

,60

0,45

-0,8

90,

51B

ulga

ria

18,0

%1,

98-0

,27

0,48

0,47

2,67

CE

E-8

Shar

e of

ICT

capi

tal i

n G

DP

grow

thTF

PLa

bour

forc

eIC

T ca

pita

lN

on-IC

T ca

pita

lG

DP

grow

th

Page 12: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

IV. I

CT

spill

over

effe

cts

Page 13: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

Pote

ntia

lfor

ICT

spill

over

s…IC

T (I

nter

net)=

>fas

ter p

rodu

ctio

n, d

iffus

ion,

and

shar

ing

of

know

ledg

e=>

fast

er p

ace

of in

nova

tion=

>inc

reas

e in

pr

oduc

tivity

gro

wth

rate

s;

ICT

acce

lera

te d

iffus

ion

of e

xist

ing

know

ledg

e th

roug

h im

itatio

n, a

dopt

ion

and

diff

usio

n of

bus

ines

s mod

els,

idea

s and

th

roug

h im

prov

ing

acce

ss to

info

rmat

ion;

ICT

tend

to st

imul

ate

chan

ges i

n bu

sine

ss m

odel

s and

in

crea

sed

inve

stm

ents

in h

uman

cap

ital a

t the

firm

leve

l. Th

ese

posi

tivel

y co

ntrib

ute

to in

crea

se in

pro

duct

ivity

; IC

T –

sim

ilarly

to e

arlie

r tec

hnol

ogic

al re

volu

tions

bas

ed o

n ge

nera

l-pur

pose

tech

nolo

gies

(ele

ctric

ity, c

ombu

stio

n en

gine

) –

may

in fu

ture

find

yet

unk

now

n ap

plic

atio

ns, w

hich

cou

ld

enha

nce

over

all p

rodu

ctiv

ity g

row

th.

Page 14: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

Agg

rega

teco

ntri

butio

nof

ICT

to G

DP

grow

th, 1

995-

2001

Page 15: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

And

labo

urpr

oduc

tivity

Page 16: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

Det

erm

inan

tsof

ICT

use

Page 17: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

„New

Eco

nom

yIn

dica

tor”

ran

king

-13

375

23R

ussi

a

-12.

063

22R

oman

ia

-10.

372

21B

ulga

ria

-7.0

4220

Pola

nd

-5.6

7019

Slov

akia

-5.3

9918

Gre

ece

-3.1

0216

Spai

n

-3.1

4117

Italy

-2.1

6315

Hun

gary

-1.0

6014

Czec

h Re

p.

-0.1

8013

Slov

enia

1.34

012

Fran

ce

2.07

611

Portu

gal

3.10

510

Ger

man

y

5.16

27

USA

5.02

18

Aus

tria

4.85

79

Finl

and

5.62

46

Bel

gium

6.34

34

UK

6.21

05

Irela

nd

7.33

13

Den

mar

k

8.00

12

Net

herla

nds

9.88

21

Swed

en

Val

ue 1

995-

2001

Ran

kC

ount

ry

Page 18: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

Pote

ntia

lofI

CT

inve

stm

ents

for

GD

P gr

owth

inPo

land

until

2025

Ass

umpt

ions

:1.

Empl

oym

ent w

ill g

row

by

0.5%

ann

ually

unt

il 20

25. T

his w

ould

tran

slat

e –

cete

ris p

arib

us–

into

the

unem

ploy

men

t lev

el o

f 7%

at t

he e

nd o

f the

pe

riod.

2.D

epre

ciat

ion

rate

for n

on-I

CT

capi

tal:

7.5%

ann

ually

; for

IT h

ardw

are,

so

ftwar

e an

d co

mm

unic

atio

ns e

quip

men

t: 29

.5%

, 31.

5% a

nd 1

1.5%

, re

spec

tivel

y.3.

Labo

r com

pens

atio

n sh

are

in to

tal i

ncom

e to

am

ount

to 6

5% th

roug

hout

the

perio

d 4.

TFP

grow

th: 1

.5%

ann

ually

(ver

sus 2

,05%

on

aver

age

durin

g 19

95-2

001)

. 5.

ICT

hedo

nic

pric

e de

flato

r: pr

ices

of I

T ha

rdw

are,

softw

are

and

com

mun

icat

ions

equ

ipm

ent u

ntil

2025

will

dec

reas

e at

an

aver

age

hedo

nic

rate

equ

al to

the

1990

-200

1 av

erag

e ra

te fo

r the

US,

that

is, r

espe

ctiv

ely,

20

.7%

, 1.3

% a

nd 3

.2%

ann

ually

.6.

Non

-IC

T de

flato

r: 3%

ann

ual g

row

th.

7.In

crea

se in

real

inve

stm

ents

in IC

T (b

efor

e de

flatio

n w

ith h

edon

ic p

rice

inde

x): 5

, 10%

and

15%

ann

ually

.8.

Incr

ease

in re

al n

on-I

CT

inve

stm

ents

: 5%

ann

ually

.

Page 19: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

Con

trib

utio

nto

GD

P gr

owth

20,0

%1,

500,

320,

851,

592,

434,

2615

%

15,0

%1,

500,

320,

601,

592,

194,

0110

%

9,3%

1,50

0,32

0,35

1,59

1,94

3,76

5%

Shar

e of

ICT

in G

DP

grow

th

TFP

Labo

urfo

rce

ICT

ca

pita

lN

on-I

CT

capi

tal

Tota

l ca

pita

lG

DP

grow

thR

eal r

ate

of

grow

th in

IC

T in

vest

men

ts*

Page 20: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

ICT

iske

yto

futu

regr

owth

…Si

mpl

e, p

ost-t

rans

ition

grow

thre

serv

esar

eby

now

alm

ost

exha

uste

d.In

futu

re, f

asto

utpu

tand

LP g

row

thw

ill h

ave

to re

lym

ostly

on

grow

thin

TFP,

whi

chw

ill n

ot b

e po

ssib

lew

ithou

tsus

tain

edpr

ogre

ssin

econ

omic

rest

ruct

urin

g(in

par

ticul

arof

the

serv

ice

sect

or) b

ased

on th

eus

eof

ICT

Inve

stm

ents

inIC

T ha

veto

be

com

plem

ente

dw

ithch

ange

sin

orga

niza

tiona

lstru

ctur

esan

din

crea

sein

ICT

skill

soft

hela

bour

forc

e

Page 21: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

ICT

pro

vide

addi

tiona

lop

port

uniti

es..

Impl

emen

tatio

nof

ICT

islik

ely

to st

imul

ate

fast

erpr

oduc

tivity

grow

thon

the

firm

leve

l(sp

illov

eref

fect

s)N

ew, y

etun

know

nap

plic

atio

nsof

ICT

can

infu

ture

cont

ribut

eto

incr

ease

inpr

oduc

tivity

Yet

, mor

etim

e is

need

edfo

r firm

sto

lear

nto

pro

duct

ivel

yus

eIC

T –

CEE

cou

ntrie

sto

fully

bene

fitaf

ter2

010

Page 22: The Aggregate Contribution of ICT to Output and Labour ... · Future impact of ICT – contribution to growth in Poland until 2025) ... between ICT sector value added ... -3.141 17

Polic

yre

com

men

datio

nsC

ondu

cive

over

allb

usin

esse

nviro

nmen

t–m

acro

econ

omic

stab

ility

, low

adm

inis

trativ

eba

rrie

rs, t

rans

pare

nt a

ndef

fect

ive

regu

latio

nsC

ompe

titio

n, c

ompe

titio

n, c

ompe

titio

n!D

evel

opm

ento

fpub

lice-

serv

ices

(pus

hst

rate

gy)

Impl

emen

tatio

nof

publ

ice-

proc

urem

ents

yste

ms

Polit

ical

prio

rity

for I

CT

Prom

otio

nof

bene

fitso

fIC

T us

eam

ong

busi

ness

esan

din

divi

dual

sIn

crea

sed

outla

yson

ICT

train

ing

(IC

T „d

rivin

glic

ence

s”,

lifel

ong

lear

ning

)