Information and communications technology: Review of the ICT Literature
ICT is considered one of the three major technological breakthroughs of the modern era (see Edquist and Henrekson 2007), the others being steam power and electricity. ICT includes some of the wider information technology innovations and applications, and their commercialization and transfer have been quite rapid. These enhance the communication of more accurate and value-added information to workers, managers, and consumers, thus reducing uncertainty and timeuse in conductingmany types of businesses.
There has been great interestamong researchers in investigating how some countries were able to take advantage of ICT to accelerate their rates of growth and productivity. In these studies one examines the contribution of IT investment to economic growth and finds that the returns on IT investment are significantly positive. In the transitional countries of Central and Eastern Europe (CEE), one observes a chronic underinvestment in telecommunications infrastructure. The result suggests that improving investment may ultimately improve the channel between aggregate investment and growth economywide (see alsoZhu 1996;Madden and Savage 1998).
Return on IT differs by the country’s development level.Results fromintercountry studies relating IT and non-IT inputs to gross domestic product (GDP) over time suggest that for developed countries, returns fromITcapital investments are positive, while returns from non-IT capital investments are not commensurate with relative factor shares. The situation is reversed for developing countries, where
Table 1 An industrial sector based definition of ICT
U.S. Department of Commerce
IT producing industries
OECD ICT industry
Computers and equipment Wholesale trade of computers and equipment Retail trade of computers and equipment Calculating and office machines Magnetic and optical recording media Electron tubes Printed circuit boards Semiconductors Passive electronic components Industrial instruments for measurement Instruments for measuring electricity Laboratory analytical instruments
Communications equipment industries
Household audio and video equipment Telephone and telegraph equipment Radio and TV communications equipment
Computer programming Prepackaged software Wholesale trade of software Retail trade of software Computer integrated system design Computer processing, data preparation Information retrieval services Computer services management Computer rental and leasing Computer maintenance and repair Computer related services, NEC
Communications services industries Telephone and telegraph communications Cable and other TV services
Manufacture of office, accounting, and computing machinery Manufacture of insulated wire and cable Manufacture of electronic valves, tubes, and other electronic components Manufacture of television and radio transmit ters and apparatus for line telephony and line telegraphy Manufacture of television and radio receivers, sound or video recording or reproducing apparatus, and associated goods Manufacture of instruments and appliances for measuring, checking, testing, navigating, and other purposes, except industrial process control equipment Manufacture of industrial process control equipment
Services: Goods related
Wholesale of machinery, equipment, and sup plies Renting of office machinery and equipment (including computers)
Services: Intangible Telecommunications Computer and related activities returns fromnon-ITcapital are quite substantial, but those fromIT capital investments are not statistically significant. The impacts of IT investment on economic growth in a cross section of countries shows that the relative contribution of IT toGDPgrowth in developing counties between 1980 and 1995was less than 2 percent, compared tomore than 10 percent in developed countries (see Dewan and Kraemer 2000; Pohjola 2001).