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Innovation and Productivity in Services and Manufacturing: The Role of ICT Investment

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  • Diego Aboal
  • Ezequiel Tacsir

Abstract

Several studies have highlighted information and communications technology (ICT) as a driver of firm productivity in developed countries. However, evidence of the impacts of ICT on services and manufacturing, particularly in developing countries, is scarce. This paper analyzes the determinants of investment in ICT at the firm level and how investments in ICT ultimately affect innovation and productivity in Uruguayan service firms compared to manufacturing firms. The results show that investments in ICT are subject to economies of scale to a greater degree than other types of investments. They are also important for product or process innovations in the service sector. The absence of investment in ICT conspires against non-technological (e.g., organizational or marketing) innovations. ICT and other innovation investments are positively associated with productivity in services, but only ICT affects productivity in manufacturing. The absence of investment in ICT is associated with lower levels of productivity.

Suggested Citation

  • Diego Aboal & Ezequiel Tacsir, 2015. "Innovation and Productivity in Services and Manufacturing: The Role of ICT Investment," IDB Publications (Working Papers) 7381, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:7381
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    Cited by:

    1. Juan Jung & Enrique López-Bazo & Matteo Grazzi, 2017. "Internet and enterprise productivity: evidence from Latin America," IREA Working Papers 201709, University of Barcelona, Research Institute of Applied Economics, revised May 2017.
    2. Roberto Álvarez, 2016. "The Impact of R&D and ICT Investment on Innovation and Productivity in Chilean Firms," Working Papers wp428, University of Chile, Department of Economics.

    More about this item

    Keywords

    Information and Communications Technology; Investment; Services Industry; Productivity; Innovation;

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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