Information and communications technology: Investment in ICT and Its Diffusion
Evidence on the role of ICTinvestment is primarily available at the macroeconomic level. It has been observed that ICT has been a very dynamic area of investment, due to the steep decline in ICT prices, which has encouraged investment in ICT and expansion of production at the same time shifting investment away from other assets. The capital deepening that results from investment in ICT is considered an important driver of economic growth. It establishes the infrastructure for the use of ICT networks and provides productive equipment and software to businesses. Measures of ICT investment are therefore of considerable interest in examining growth performance in many countries. Investment is usually estimated by using business surveys. These surveys usually allowthe total investment to be disaggregated into a number ofwell-defined asset groups, including ICT.There is a broad understanding in the statistical community about the definition of ICT products. The pace of investment differs widely by country. The lowest levels of the share of investment in ICT are found in low-income nations, while the highest are in high-income nations.
Generally, network products, including telephone, e-mail, Internet, computer hardware, and software, have distinct features such as network effect, critical mass, lock-in, and path dependency, which affect late takeoff in their diffusion. A positive direct network effectmeans a positive utility gain for consumers when the number of users operating the same system increases. For example, the first e-mail message was sent in 1969, but the adoption did not take off until 1990. Since then, Internet traffic has been doubling every year. This example raises an important question, which is when to expect a new technology to diffuse and what should be the minimum number of users (the critical mass) needed for inducing potential consumers to adopt it.
At the global level, the diffusion of key ICTs such as the Internet, mobile phones, and personal computers in accordance with the World Bank’s classifications are shown in figures 1, 2, and 3. To judge fromthese graphs,which are based on data published in OECD (2000; 2004), United Nations Conference on Trade and Development (2003), U.S. Department of Commerce (2003), andWorld Bank (2006), we observed that high-income countries showa high level of diffusion. In addition, in the case of the diffusion of the Internet and personal computers, the gap between high-income and low-income countriesmeasured in Internet users per 1,000 people increases over time.
The ‘‘digital divide’’ is the socioeconomic difference between communities with access to computers and the Internet and thosewithout such access.At the microlevel, it refers to the gap between individuals, households, businesses, and geographical areas with regard to their opportunities and abilities to access and to use IT services for a wide variety of activities. The gap is due to differing literacy and technical skills, and the gap in availability of useful digital content. The digital divide at the aggregate level is often discussed in conjunction with the gap between rich and poor, and developed and underdeveloped nations concerning access to and use of digital communication. In an international context, the divide indicates that developed countries are far better equipped than developing countries to use the advantages of rapidly expanding Internet technology. The more rapidly the rate at which Internet technology is developed and spread, the more the quality-of-life differences between developed and underdeveloped countries become evident. Despite the productivity, connectivity, and many other recognized and measurable positive effects associated with Internet use, the international digital divide is widening.
Given the gradually decreasing number of fixed (land-line) telephone subscribers per 1,000 people in contrast to mobile subscribers, it is highly probable that the traditional fixed phone is being supplanted by themobile phone as telecommunications services develop. Consumers show increasing preference for data-based communication instead of voice-based, and new communications services such as voiceover- Internet protocol have entered the market through the development of Internet technology. Giventhe Internet’s highrateof growthandthe emergence of broadband services, the difference between Internet telephony and traditional voice telephony has begun to erode. Such changes are dynamically transforming the traditional communications industry structure. The diffusion into the marketplace of telephone,mobile phone, and Internet services has progressed differently in different places, determined mainly by local and regional economic conditions.