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Information & communication technology and true real GDP: economic analysis and findings for selected countries

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  • Paul Welfens
  • Jens Perret

Abstract

The expansion of information & communication technology (ICT) is continuing in OECD countries and the world economy – partly due to the ongoing fall of relative ICT prices. The continuing absolute fall of ICT prices and ICT capital prices, respectively, is not adequately considered in the standard analysis of ICT. In the study presented here the ICT investment-GDP ratio is calculated in real terms and it is shown that this ratio is higher (order of magnitude is about 2 percentage points) than the nominal investment-GDP ratio which is misleading the ICT sector, policy makers and society at large. Moreover, we take an innovative look at the digital time budget of private households in selected OECD countries. Assuming that 10 % represents the relevant share of the time budget the digital value-added of private households stands for an unrecorded digital value-added of 2–5 % of gross domestic product; with a share of 20 % of the household’s internet time budget devoted to value-added the hidden internet value-added in the US would be in the range of 4.7–10.4 %. Hence the overall understimation of the ICT sector’s contribution to GDP is considerable and therefore changes in official statistical analysis and the System of National Accounts are required. Copyright Springer-Verlag Berlin Heidelberg 2014

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  • Paul Welfens & Jens Perret, 2014. "Information & communication technology and true real GDP: economic analysis and findings for selected countries," International Economics and Economic Policy, Springer, vol. 11(1), pages 5-27, February.
    • Handle: RePEc:kap:iecepo:v:11:y:2014:i:1:p:5-27
    DOI: 10.1007/s10368-013-0261-8
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    Cited by:

    1. Massimo Arnone & Alberto Costantiello & Angelo Leogrande & Syed Kafait Hussain Naqvi & Cosimo Magazzino, 2024. "Financial Stability and Innovation: The Role of Non-Performing Loans," FinTech, MDPI, vol. 3(4), pages 1-41, October.
    2. Sorin-Iulian Cioacă & Silvia-Elena Cristache & Mariana Vuță & Erika Marin & Mihai Vuță, 2020. "Assessing the Impact of ICT Sector on Sustainable Development in the European Union: An Empirical Analysis Using Panel Data," Sustainability, MDPI, vol. 12(2), pages 1-16, January.
    3. Paul Welfens, 2014. "Issues of modern macroeconomics: new post-crisis perspectives on the world economy," International Economics and Economic Policy, Springer, vol. 11(4), pages 481-527, December.
    4. Paul J.J. Welfens & Evgeniya Yushkova, 2018. "IKT-Sektor in China und Wirtschaftsbeziehungen zu Deutschland," EIIW Discussion paper disbei244, Universitätsbibliothek Wuppertal, University Library.
    5. Welfens, Paul J. J. & Irawan, Tony, 2014. "European Innovation Dynamics and US Economic Impact: Theory and Empirical Analysis," IZA Discussion Papers 8507, Institute of Labor Economics (IZA).
    6. Udalov, Vladimir & Welfens, Paul J. J., 2017. "Digital and Competing Information Sources: Impact on Environmental Concern and Prospects for Cooperation," IZA Discussion Papers 10684, Institute of Labor Economics (IZA).
    7. Paul Welfens & Tony Irawan, 2014. "Transatlantic trade and investment partnership: sectoral and macroeconomic perspectives for Germany, the EU and the US," International Economics and Economic Policy, Springer, vol. 11(3), pages 293-328, September.
    8. David Hanrahan, 2021. "Digitalization as a Determinant of Tax Revenues in OECD Countries: A Static and Dynamic Panel Data Analysis," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 7(4), pages 321-348, October.
    9. Paul J.J. Welfens, 2014. "Competition in Telecommunications and Internet Services: Problems with Asymmetric Regulations," EIIW Discussion paper disbei205, Universitätsbibliothek Wuppertal, University Library.
    10. Paul J. J. Welfens, 2016. "Overcoming the euro crisis and prospects for a political union," International Economics and Economic Policy, Springer, vol. 13(1), pages 59-103, January.
    11. Welfens, Paul J. J., 2016. "Integrated Macroeconomic Production Function for Open Economies: A New Schumpeterian Solow Model for Globalization," IZA Discussion Papers 9724, Institute of Labor Economics (IZA).
    12. Evgeniy Popov & Konstantin Semyachkov & Viktoriya Simonova, 2017. "The Influence of Information and Communication Technologies on the Regional Innovative Activity," Accounting and Finance Research, Sciedu Press, vol. 6(1), pages 1-1, February.
    13. Paul J. J. Welfens, 2016. "Deriving the new quantity equation: an approach for a closed and an open economy," International Economics and Economic Policy, Springer, vol. 13(4), pages 549-561, October.
    14. Haroon Ur Rashid Khan & Khalid Zaman & Anwar Khan & Talat Islam, 2017. "Quadrilateral Relationship Between Information and Communications Technology, Patent Applications, Research and Development Expenditures, and Growth Factors: Evidence from the Group of Seven (G-7) Cou," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(3), pages 1165-1191, September.
    15. Vladimir Udalov & Paul J. J. Welfens, 2021. "Digital and competing information sources: Impact on environmental concern and prospects for international policy cooperation," International Economics and Economic Policy, Springer, vol. 18(4), pages 631-660, October.
    16. Paul J.J. Welfens, 2016. "Schumpeterian Macroeconomic Production Function for Open Economies: A New Endogenous Knowledge and Output Analysis," EIIW Discussion paper disbei211, Universitätsbibliothek Wuppertal, University Library.
    17. Paul J.J. Welfens & Toni Irawan & Jens K. Perret, 2016. "True Investment-GDP Ratio in a World Economy with Investment in Information & Communication Technology," EIIW Discussion paper disbei215, Universitätsbibliothek Wuppertal, University Library.
    18. Alina Wilke & Paul J. J. Welfens, 2022. "An Analysis of Corona Pandemic-related Productivity Growth in Germany: Sectoral Aspects, Work-From-Home Perspectives and Digitalization Intensity," EIIW Discussion paper disbei313, Universitätsbibliothek Wuppertal, University Library.

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    More about this item

    Keywords

    Growth; Investment; Information and communication technology; Internet usage; System of national accounts;
    All these keywords.

    JEL classification:

    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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