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Information technology, efficiency and productivity: evidence from Korean local governments

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  • Nakil Sung

Abstract

This study evaluates the performance of Korean local government by measuring their technical efficiency (TE) and total factor productivity (TFP) growth and, more importantly, examining the impact of information technology (IT) on this performance. The study is different from received analysis in that a unique measure of the state of IT-the Informatization Index-is used to investigate the impact of IT on both TE and TFP growth. Empirical analyses are conducted on data from 222 Korean local governments for the period 1999 to 2001. In particular, data envelopment analysis techniques are applied to calculate TE scores and TFP growth rates for sampled local governments. The empirical findings confirm the positive impact IT has in improving technical efficiency and accelerating productivity growth. The estimated coefficients are correctly signed (with other regional characteristics controlled for) when TE scores and TFP growth rates are regressed on the Index. In addition, the findings indicate that economies of density are present in the production of local public services.

Suggested Citation

  • Nakil Sung, 2007. "Information technology, efficiency and productivity: evidence from Korean local governments," Applied Economics, Taylor & Francis Journals, vol. 39(13), pages 1691-1703.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:13:p:1691-1703
    DOI: 10.1080/00036840600675620
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    1. Sung-Bae Mun & M. Ishaq Nadiri, 2002. "Information Technology Externalities: Empirical Evidence from 42 U.S. Industries," NBER Working Papers 9272, National Bureau of Economic Research, Inc.
    2. Mun, S-B. & Nadiri, M.I., 2002. "Information Technology Externalities: Empirical Evidence from 42 U.S. Industries," Working Papers 02-03, C.V. Starr Center for Applied Economics, New York University.
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    2. Christl, Michael & Köppl-Turyna, Monika & Kucsera, Dénes, 2018. "Public sector efficiency in Europe: Long-run trends, recent developments and determinants," Working Papers 14, Agenda Austria.
    3. bucci, valeria & ferrara, giancarlo & resce, giuliano, 2022. "Fiscal decentralization and efficiency: empirical evidence from Italian municipalities," MPRA Paper 111515, University Library of Munich, Germany.
    4. Yi-Chung Hsu, 2014. "Efficiency in government health spending: a super slacks-based model," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 111-126, January.
    5. Mohd Fazli Mohd Sam & Yasuo Hoshino, 2013. "Performance of ICT Industry in Six Asian Countries," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 4(6), pages 96-119, November.
    6. Almas Heshmati & Rachid El-Rhinaoui, 2009. "Effects of Ownership and Market Share on Performance of Mobile Operators in MENA Region," TEMEP Discussion Papers 200921, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.
    7. Isabel Narbón-Perpiñá & Kristof De Witte, 2016. "Local governments’ efficiency: A systematic literature review – Part I," Working Papers 2016/20, Economics Department, Universitat Jaume I, Castellón (Spain).
    8. Ifigeneia-Dimitra Pougkakioti, 2021. "Measuring The Efficiency And Productivity Change Of Municipalities With An Output Oriented Model:Empirical Evidence Across Greek Municipalities Over The Time Period 2012-2016," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 15(1), pages 98-125, JUNE.
    9. Caitlin T. O’Loughlin & Paul W. Wilson, 2021. "Benchmarking the performance of US Municipalities," Empirical Economics, Springer, vol. 60(6), pages 2665-2700, June.
    10. Kalb, Alexander, 2009. "What determines local governments' technical efficiency? The case of road maintenance," ZEW Discussion Papers 09-047, ZEW - Leibniz Centre for European Economic Research.
    11. Ciaian, Pavel & Rajcaniova, Miroslava & Guri, Fatmir & Zhllima, Edvin & Shahu, Edmira, 2018. "The impact of crop rotation and land fragmentation on farm productivity in Albania," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 120(3), December.
    12. Jose M. Cordero & Francisco Pedraja-Chaparro & Elsa C. Pisaflores & Cristina Polo, 2017. "Efficiency assessment of Portuguese municipalities using a conditional nonparametric approach," Journal of Productivity Analysis, Springer, vol. 48(1), pages 1-24, August.
    13. Francesco Aiello & Graziella Bonanno & Luigi Capristo, 2017. "Explaining Differences In Efficiency: The Case Of Local Government Literature," Working Papers 201704, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    14. Carnazza, Giovanni & Liberati, Paolo & Resce, Giuliano, 2023. "Income-related unmet needs in the European countries," Socio-Economic Planning Sciences, Elsevier, vol. 87(PA).
    15. Francesco Aiello & Graziella Bonanno, 2019. "Explaining Differences In Efficiency: A Meta‐Study On Local Government Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 33(3), pages 999-1027, July.
    16. Charmaine B. Distor & Odkhuu Khaltar, 2022. "What Motivates Local Governments to Be Efficient? Evidence from Philippine Cities," Sustainability, MDPI, vol. 14(15), pages 1-19, August.
    17. da Cruz, Nuno Ferreira & Marques, Rui Cunha, 2014. "Revisiting the determinants of local government performance," Omega, Elsevier, vol. 44(C), pages 91-103.
    18. Bönisch, Peter & Haug, Peter & Illy, Annette & Schreier, Lukas, 2011. "Municipality Size and Efficiency of Local Public Services: Does Size Matter?," IWH Discussion Papers 18/2011, Halle Institute for Economic Research (IWH).
    19. Devarajan, Shantayanan & Go, Delfin S. & Robinson, Sherman & Thierfelder, Karen, 2009. "Tax Policy and Carbon Emissions in South Africa," Conference papers 331869, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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