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ICT Adoption and Productivity in Developing Countries: New Firm Level Evidence from Brazil and India

Author

Listed:
  • Basant, Rakesh

    () (affiliation not available)

  • Commander, Simon

    () (IE Business School, Altura Partners)

  • Harrison, Rupert

    () (Institute for Fiscal Studies, London)

  • Menezes-Filho, Naercio

    () (University of Sao Paulo)

Abstract

This paper uses a unique new data set on nearly a thousand manufacturing firms in Brazil and India to investigate the determinants of ICT adoption and its impact on performance in both countries. The descriptive evidence shows that Brazilian firms on average use ICT more intensively than their Indian counterparts but changes over time have been rather similar in both places. Within countries ICT intensity is strongly related to size, ownership structure, share of administrative workers and education. The econometric evidence documents a strong relationship between ICT capital and productivity in both countries, even after controlling for several other factors, including firm-specific fixed-effects. The rate of return of ICT investment seems to be much larger than usually found in more developed countries. Specific types of organisational changes matter for the return of ICT, but only for high adopters. Firms report several constraints to ICT investment in both countries and power disruption seems to significantly depress adoption and returns to ICT expenditures in India. This may be indicative of the impact of a cluster of poor institutions and/or infrastructure on performance.

Suggested Citation

  • Basant, Rakesh & Commander, Simon & Harrison, Rupert & Menezes-Filho, Naercio, 2006. "ICT Adoption and Productivity in Developing Countries: New Firm Level Evidence from Brazil and India," IZA Discussion Papers 2294, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp2294
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    References listed on IDEAS

    as
    1. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
    2. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," American Economic Review, American Economic Association, vol. 91(1), pages 1-32, March.
    3. Erik Brynjolfsson & Lorin M. Hitt, 2003. "Computing Productivity: Firm-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 793-808, November.
    4. Geroski, P. A., 2000. "Models of technology diffusion," Research Policy, Elsevier, vol. 29(4-5), pages 603-625, April.
    5. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
    6. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. Elena Ketteni & Constantina Kottaridi & Theofanis Mamuneas, 2015. "Information and communication technology and foreign direct investment: interactions and contributions to economic growth," Empirical Economics, Springer, vol. 48(4), pages 1525-1539, June.
    3. Andrea Lucchesi & Matthew A. Cole & Robert J. R. Elliot & Naercio A. Menezes-Filho, 2016. "Determinants Of Environmental Innovation In Brazilian Manufacturing Industries," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42nd Brazilian Economics Meeting] 143, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    4. repec:ipg:wpaper:2014-587 is not listed on IDEAS
    5. Basant, Rakesh & Sharma, Shruti, 2014. "ICT Adoption and Organizational Change in Public and Private Enterprises," IIMA Working Papers WP2014-01-04, Indian Institute of Management Ahmedabad, Research and Publication Department.
    6. repec:wsi:medjxx:v:03:y:2011:i:01:n:s1793812011000338 is not listed on IDEAS
    7. Anissa Chaibi & Adel Ben Youssef & Leila Peltier-Ben Aoun, 2015. "E-Skills, Brains And Performance Of The Firms: ICT And Ability Of Firms To Conduct Successful Projects In Luxembourg," Post-Print halshs-01068225, HAL.
    8. Mohamed Kossaï & Patrick Piget, 2012. "Utilisation des technologies de l'information et des communications (TIC) et performance économique des PME Tunisiennes :une étude économétrique," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 55(3), pages 305-328.
    9. repec:idb:brikps:71298 is not listed on IDEAS
    10. World Bank, 2008. "Harnessing Competitiveness for Stronger Inclusive Growth : Bangladesh Second Investment Climate Assessment," World Bank Other Operational Studies 8025, The World Bank.

    More about this item

    Keywords

    productivity; ICT;

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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