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

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  • Paul Welfens

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  • Jens Perret

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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

Suggested Citation

  • 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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    References listed on IDEAS

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    1. Francesco Venturini, 2009. "The long-run impact of ICT," Empirical Economics, Springer, vol. 37(3), pages 497-515, December.
    2. Rohman, Ibrahim Kholilul, 2013. "The globalization and stagnation of the ICT sectors in European countries: An input-output analysis," Telecommunications Policy, Elsevier, vol. 37(4), pages 387-399.
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    7. Andre Jungmittag & Paul Welfens, 2009. "Liberalization of EU telecommunications and trade: theory, gravity equation analysis and policy implications," International Economics and Economic Policy, Springer, vol. 6(1), pages 23-39, June.
    8. repec:wbk:wbpubs:27411 is not listed on IDEAS
    9. Paul Welfens, 2009. "Transatlantische Bankenkrise: Dynamik und neue Reformoptionen," Wirtschaftsdienst, Springer;German National Library of Economics, vol. 89(10), pages 684-690, October.
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    11. Oecd, 2009. "Information Economy Product Definitions Based on the Central Product Classification (version 2)," OECD Digital Economy Papers 158, OECD Publishing.
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    13. anonymous, 2005. "The Federal Reserve in the international sphere," Monograph, Board of Governors of the Federal Reserve System (U.S.), number 2005tfriti.
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    15. Oecd, 2006. "International Regulatory Activities," Nuclear Law Bulletin, OECD Publishing, vol. 2005(2), pages 95-98.
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    Citations

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    Cited by:

    1. Paul 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.
    2. Paul J.J. Welfens, 2014. "Competition in Telecommunications and Internet Services: Problems with Asymmetric Regulations," EIIW Discussion paper disbei205, Universitätsbibliothek Wuppertal, University Library.
    3. 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.
    4. repec:spr:soinre:v:133:y:2017:i:3:d:10.1007_s11205-016-1402-6 is not listed on IDEAS
    5. 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.
    6. 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.
    7. Paul J.J. Welfens & Evgeniya Yushkova, 2018. "IKT-Sektor in China und Wirtschaftsbeziehungen zu Deutschland," EIIW Discussion paper disbei244, Universitätsbibliothek Wuppertal, University Library.
    8. 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.
    9. Welfens, Paul J. J. & Irawan, Tony, 2014. "European Innovation Dynamics and US Economic Impact: Theory and Empirical Analysis," IZA Discussion Papers 8507, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Growth; Investment; Information and communication technology; Internet usage; System of national accounts;

    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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