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ICT Externalities: Evidence from cross country data

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Author Info
Meijers, Huub () (UNU-MERIT)

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Abstract

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.

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Publisher Info
Paper provided by United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology in its series UNU-MERIT Working Paper Series with number 021.

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Date of creation: 2007
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Handle: RePEc:dgr:unumer:2007021

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Web page: http://www.merit.unu.edu

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Related research
Keywords: Productivity Network Effects Spillovers Information and Communication Technologies Total Factor Productivity

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Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Timmer, Marcel P. & Ypma, Gerard & Ark, Bart van der, 2003. "IT in the European Union: driving productivity divergence?," GGDC Research Memorandum 200363, Groningen Growth and Development Centre, University of Groningen. [Downloadable!]
  2. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: US Economic Growth in the Information Age," OECD Economics Department Working Papers 261, OECD Economics Department. [Downloadable!]
    Other versions:
  3. Bertschek, Irene & Kaiser, Ulrich, 2001. "Productivity effects of organizational change : microeconometric evidence," ZEW Discussion Papers 01-32, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  4. Soete, Luc & Freeman, Chris, 2007. "Developing science, technology and innovation indicators: what we can learn from the past," UNU-MERIT Working Paper Series 001, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology. [Downloadable!]
  5. Stiroh, Kevin J, 2002. "Are ICT Spillovers Driving the New Economy?," Review of Income and Wealth, Blackwell Publishing, vol. 48(1), pages 33-57, March. [Downloadable!] (restricted)
  6. Mary O'Mahony & Michela Vecchi, 2005. "Quantifying the Impact of ICT Capital on Output Growth: A Heterogeneous Dynamic Panel Approach," Economica, London School of Economics and Political Science, vol. 72(288), pages 615-633, November. [Downloadable!] (restricted)
  7. Liebowitz, S J & Margolis, Stephen E, 1994. "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 133-50, Spring. [Downloadable!] (restricted)
  8. Jeffrey Church & Neil Gandal & David Krause, 2003. "Indirect Network Effects and Adoption Externalities," Microeconomics 0301001, EconWPA. [Downloadable!]
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  9. Katz, Michael L & Shapiro, Carl, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring. [Downloadable!] (restricted)
  10. Barro, Robert J, 1999. " Notes on Growth Accounting," Journal of Economic Growth, Springer, vol. 4(2), pages 119-37, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Georg Erber & Reinhard Madlener, 2007. "Nested Stochastic Possibility Frontiers with Heterogeneous Capital Inputs," Discussion Papers of DIW Berlin 720, DIW Berlin, German Institute for Economic Research. [Downloadable!]
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