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The Impact of ICT on Growth in Transition Economies

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  • Piatkowski, Marcin

Abstract

The paper analyzes the multi-channel contribution of Information and Communication Technologies (ICT) to output and labour productivity growth in eight transition economies of Central and Eastern Europe (CEE), i.e. Bulgaria, Czech Republic, Hungary, Poland, Romania, Russia, Slovakia and Slovenia between 1995-2001. The impact of ICT on growth in the new five EU member countries (Czech Republic, Hungary, Poland, Slovakia and Slovenia) was higher than the average for the former EU-15. Hence, ICT - through both the capital deepening and TFP growth in ICT-producing sector - contributed to convergence of the level of income between those countries and the EU-15. This was however not the case for Bulgaria, Romania, and Russia, where ICT contribution to growth was lower than in the EU- 15. ICT thus led to income deconvergence. Future growth prospects of the CEE countries, including Russia, will largely depend on further ICT investments and an ability to ensure their productive use on a macro, industry and micro level. The paper speculates that ICT capital will have a significant contribution to long-term growth in Poland, taken as a proxy for other CEE countries, on the level of 15% of the projected average annual GDP growth of 4% until 2025. This projection does not however take into account the potential for emergence of new applications of ICT, which could stimulate further increases in aggregate productivity. Neither does it measure the possible contribution from TFP growth in ICT sector and from the spillover effects of ICT production and use. The paper argues that the potential of ICT will not however be realized without changes in business models and an increase in the quality of human capital and ICT skills. On the macrolevel, as indicated by the New Economy Indicator, ICT will not benefit CEE countries without them making consistent progress in economic, institutional and regulatory environment.

Suggested Citation

  • Piatkowski, Marcin, 2004. "The Impact of ICT on Growth in Transition Economies," MPRA Paper 29399, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:29399
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    References listed on IDEAS

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    Cited by:

    1. Lukasz Arendt & Wojciech Grabowski, 2017. "Innovations, ICT and ICT-driven labour productivity in Poland," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 25(4), pages 723-758, October.
    2. Elena Toader & Bogdan Narcis Firtescu & Angela Roman & Sorin Gabriel Anton, 2018. "Impact of Information and Communication Technology Infrastructure on Economic Growth: An Empirical Assessment for the EU Countries," Sustainability, MDPI, vol. 10(10), pages 1-22, October.
    3. Hubert Gabrisch, 2020. "The productivity puzzle and the Kaldor-Verdoorn law: the case of Central and Eastern Europe," NBP Working Papers 318, Narodowy Bank Polski.
    4. Leitão, João & Ferreira, João, 2007. "Liberalization of European Telecommunications and Entrepreneurship: Why German and Portuguese Experiences are so Equal and so Different?," MPRA Paper 5728, University Library of Munich, Germany.
    5. Yemisi Kuku & Peter F. Orazem & Rajesh Singh, 2007. "Computer adoption and returns in transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15(1), pages 33-56, January.
    6. Adriana Grigorescu & Elena Pelinescu & Amalia Elena Ion & Monica Florica Dutcas, 2021. "Human Capital in Digital Economy: An Empirical Analysis of Central and Eastern European Countries from the European Union," Sustainability, MDPI, vol. 13(4), pages 1-21, February.
    7. Diana Mihaela Apostol & Cristina Balaceanu, 2011. "Growth and Technology: The New Economy in the 2000's CEE Countries and Romania," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 1(2), pages 46-55, December.
    8. Samoilenko, Sergey & Osei-Bryson, Kweku-Muata, 2008. "An exploration of the effects of the interaction between ICT and labor force on economic growth in transition economies," International Journal of Production Economics, Elsevier, vol. 115(2), pages 471-481, October.
    9. Hubert Gabrisch, 2021. "The long-run properties of the Kaldor–Verdoorn law: a bounds test approach to a panel of Central and East European (CEE) countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(1), pages 101-121, February.

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    More about this item

    Keywords

    productivity; ICT; Eastern Europe;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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