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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 of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2294
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    References listed on IDEAS

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    6. 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.
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    Cited by:

    1. 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.
    2. 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].
    3. repec:ipg:wpaper:2014-587 is not listed on IDEAS
    4. Aboal D. & Tacsir E., 2015. "Innovation and productivity in services and manufacturing : The role of ICT investment," MERIT Working Papers 2015-012, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Jung, Juan, 2014. "Regional inequalities in the impact of broadband on productivity: Evidence from Brazil," MPRA Paper 56177, University Library of Munich, Germany.
    6. 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.
    7. Agu, Chinonso .V. & Aguegboh, Ekene .S., 2020. "ICT and Bank Performance in Sub-Saharan Africa: A Dynamic Panel Analysis," MPRA Paper 100355, University Library of Munich, Germany.
    8. 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.
    9. Adel Ben Youssef & Walid Hadhri & Téja Meharzi, 2015. "Adoption of Cloud Computingin Emerging Countries: The Role of the Absorptive Capacity," Post-Print halshs-01302772, HAL.
    10. Adel Ben Youssef & Walid Hadhri & Hatem M’Henni, 2011. "Intra-Firm Diffusion of Innovation: Evidence from Tunisian SMEs Regarding Information and Communication Technologies," Middle East Development Journal, Taylor & Francis Journals, vol. 3(1), pages 75-97, January.
    11. Seema Sangita, 2021. "Higher Education, Vocational Training and Performance of Firms," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 15(1), pages 122-148, February.
    12. 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.
    13. repec:idb:brikps:71298 is not listed on IDEAS
    14. World Bank, 2008. "Harnessing Competitiveness for Stronger Inclusive Growth : Bangladesh Second Investment Climate Assessment," World Bank Publications - Reports 8025, The World Bank Group.
    15. Debbra Toria Nipo & Jaratin Lily & Sidah Idris & Saizal Pinjaman & Imbarine Bujang, 2023. "Information and Communication Technology (ICT) on Economic Growth in Asia: A Panel Data Analysis," International Journal of Business and Management, Canadian Center of Science and Education, vol. 17(12), pages 1-18, February.
    16. Barros, Henrique M. & Lazzarini, Sergio G., 2009. "Meritocracy and Innovation: Is There a Link? Empirical Evidence from Firms in Brazil," Insper Working Papers wpe_162, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    17. Diego Aboal & Ezequiel Tacsir, 2018. "Innovation and productivity in services and manufacturing: the role of ICT," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(2), pages 221-241.
    18. Aneel Bhusal, 2022. "Impact of Information and Communication Technology on Individual Well-being," Papers 2202.00006, arXiv.org, revised Feb 2022.

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    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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