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How ICT Investment Influences Energy Demand in South Korea and Japan?

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  • Khayyat, Nabaz T.
  • Lee, Jongsu
  • Lee, Jeong-Dong

Abstract

This empirical study examines productivity changes in Japan and South Korea during 1973–2006 and 1980–2009, respectively, in order to assess how investment in information and communications technology (ICT) affects energy demand. A dynamic factor demand model is applied to link inter-temporal production decisions by explicitly recognizing that the level of certain factors of production (refer to as quasi-fixed factors) cannot be changed without incurring so-called adjustment costs, defined in terms of forgone output from current production. This study quantifies how ICT capital investment in Korea and Japan affects economic growth in general and industrial energy demand in particular. We find that ICT and non-ICT capital investment serve as substitutes for the inputs of labor and energy use. The results also demonstrate a decreasing trend for labor productivity as well as significant cost differences across industries in both countries.

Suggested Citation

  • Khayyat, Nabaz T. & Lee, Jongsu & Lee, Jeong-Dong, 2014. "How ICT Investment Influences Energy Demand in South Korea and Japan?," MPRA Paper 55454, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:55454
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    2. Tilman Santarius & Johanna Pohl & Steffen Lange, 2020. "Digitalization and the Decoupling Debate: Can ICT Help to Reduce Environmental Impacts While the Economy Keeps Growing?," Sustainability, MDPI, vol. 12(18), pages 1-20, September.

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    More about this item

    Keywords

    Dynamic factor demand; Panel data; ICT investment; Energy demand;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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