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The Importance of ICT for the Knowledge Economy: A Total Factor Productivity Analysis for Selected OECD Countries

In: Proceedings of the Conference on Emerging Economic Issues in a Globalizing World

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  • Ýsmail Seki

    (Ege University)

Abstract

Science, technology and innovation have become key factors contributing to economic growth in both advanced and developing economies. In the knowledge economy, information circulates at the international level through trade in goods and services, direct investment and technology flows, and the movement of people. Information and communication technologies (ICT) have been at the heart of economic changes for more than a decade. ICT sector plays an important role, notably by contributing to rapid technological progress and productivity growth. Firms use ICTs to organize transnational networks in response to international competition and the increasing need for strategic interaction. As a result, multinational firms are a primary vehicle of the everspreading process of globalization. New technologies and their implementation in productive activities are changing the economic structure and contributing to productivity increases in OECD economies. Economic competitiveness depends on productivity level and in the knowledge economy, ICT sectors determine the productivity level. As a result , we can say that the power of economic competitiveness of a country depends on the productivity of its ICT sector. There are two ways to improve the TFP of ICT and to improve the power of competitiveness. First of all, if the selected countries solve their inefficiency problem by reallocation of resources, they can improve their TFP of the ICT sector and as a result they can be more competitive. Secondly, the technological improvement in these countries creates an expectation about increasing TFP of ICT sector for future. If there will be a sustainable technological improvement by innovation, it will cause a sustainable increase in the TFP of ICT sector and as a result it will cause a sustainable increase in competitiveness.

Suggested Citation

  • Ýsmail Seki, 2008. "The Importance of ICT for the Knowledge Economy: A Total Factor Productivity Analysis for Selected OECD Countries," Papers of the Annual IUE-SUNY Cortland Conference in Economics,in: Proceedings of the Conference on Emerging Economic Issues in a Globalizing World, pages 72-90 Izmir University of Economics.
  • Handle: RePEc:izm:prcdng:200804
    as

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    File URL: http://eco.ieu.edu.tr/wp-content/proceedings/2008/0804.pdf
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    References listed on IDEAS

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    2. Antonelli, Cristiano, 2005. "Models of knowledge and systems of governance," Journal of Institutional Economics, Cambridge University Press, vol. 1(01), pages 51-73, June.
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    4. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455, April.
    5. Nicolai J. Foss, 2006. "The Emerging Knowledge Governance Approach Challenges and Characteristics," DRUID Working Papers 06-10, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    6. Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-1238, December.
    7. Jesus Felipe, 1999. "Total factor productivity growth in East Asia: A critical survey," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 1-41.
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