ICT Externalities: Evidence from cross country data
Huub Meijers
#2007-021
This paper reports the findings of an empirical study on the external
effects of Information and Communication Technologies (ICT) on economic
growth and productivity at an aggregate level. It focuses on possible
network effects and spillovers emerging as externalities from
investments in ICT. The existence of externalities is well described in
theoretical work however empirical evidence is scarce. By using time
series at the macro level for a panel of 15 countries I find positive
externalities for investments in IT software and in telecommunication
equipment, but not for IT hardware. The analysis, which accounts for
cyclical effects and also takes external effects from non-ICT factors
into account, points at considerable lags between the time of investing
in these technologies and the time at which the externalities arise.
Taking these externality effects into account, the paper shows that the
impact of ICT on productivity is almost twice as high as compared to a
model that does not include such effects.
Keywords: productivity, network effects, spillovers, Information and
Communication Technologies, total factor productivity
JEL Classification: D24, O11, O47
UNU-MERIT Working Papers
ISSN 1871-9872