1 / 19

Bridging the ‘Digital Divide’: Information Technology & Growth in Small Developing States

Bridging the ‘Digital Divide’: Information Technology & Growth in Small Developing States. Robert Read & Didier Soopramanien. IT & Economic Growth Theory. Endogenous growth theory suggests that IT has several types of impact:

giulio
Télécharger la présentation

Bridging the ‘Digital Divide’: Information Technology & Growth in Small Developing States

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Bridging the ‘Digital Divide’: Information Technology & Growth in Small Developing States Robert Read & Didier Soopramanien

  2. IT & Economic Growth Theory Endogenous growth theory suggests that IT has several types of impact: • Technology transfer – ‘learning-by-doing’ and leading edge technologies. • Education - human capital and skills. • Externality effects – no diminishing returns to scale on investment

  3. IT & Economic Development Technology transfer is necessary but insufficient for growth and convergence between countries. • ‘Leap-frogging’ and absorptive capacity. • Environment encouraging innovation and adoption of new technology • Availability of appropriate skills.

  4. Small States & Growth Theory Endogenous growth theory highlights key role of specific factors • Human capital. • Technology. • Trade. • Quality of economic policies. All are important growth determinants in small states.

  5. IT & Growth in Small States IT is important in the context of the growth of small states because: • IT has key role to play in services, including tourism – a key source of their comparative advantage. • This implies that IT has a critical role in the future growth of small states • Subject to labour supply and skills constraints.

  6. Size Constraints on IT The small size of the domestic market has important implications of IT adoption: • Lack of ‘critical mass’ reduces the scope for scale economies associated with new technologies and ideas. • Small size reduces the spillover benefits of new technologies (as with FDI). • Constrained physical and human resources – absorptive capacity.

  7. Potential of IT in Small States • Widens the market through trade and information diffusion. • Provides a platform for marketing and information exchange – strengthening comparative advantage. • Greater scope for business to business (B2B) interaction in the supply chain.

  8. Impact of IT in Small States • Strengthening of comparative advantage of open economies. • Promotion of service industries in small states, e- tourism. • Reduction or elimination of geographical and spatial barriers of remote and island states.

  9. Study Hypotheses • e-commerce is related to market size. • Adoption is influenced by: - The stock of physical capital (investment in infrastructure). - The stock of human capital (investment in education). • e-commerce has a positive effect on economic growth.

  10. Endogenous Determination ofe-Commerce Adoption Development of an endogenous framework for adoption of e-commerce. Threshold effect in small states (minimum market size). ‘Double barrier’ effect (minimum levels of both physical and human capital stocks).

  11. Physical Capital Human Capital Market Size Telecom Infrastructure E-commerce Economic Growth

  12. Data • Sample size: - i) 205 states – 129 > 3m, 76 < 3m. - ii) 126 states – 93 > 3m, 33 < 3m. • e-commerce adoption – Internet hosts. • Telecom infrastructure – ITU. • Human capital – UNESCO. • World Bank Development CD-ROM. All data is for 2000

  13. SURE Methodology SURE - seemingly unrelated regression equations. Used given endogenous relationship between the variables. LnHosts = f (LnDGCF, LnEnrol, LnTel, LnGDP, other factors + error term) GDP = f (LnDGCF, LnHosts, LnEnrol, LnTel, LnGDP, other factors + error term)

  14. Composite Measure of Investment CMI = f (LnTel, LnEnrol, LnDGCF) This is substituted into previous equations. Factor analysis

  15. Model Specification LnHosts = f (CMI, LnGDP, other factors +error term) LnGDP = f (CMI, LnHosts, other factors +error term) Model 1 LnHosts = f (CMI, LnGDP, Small, other factors + error term) LnGDP = f (CMI, LnHosts, Small other factors + error term) Model 2 Small state is ‘small’ = 1; 0 otherwise.

  16. Model Specification 1

  17. Model Specification 2

  18. Empirical Results • The growth impact of e-commerce depends upon: - Minimum thresholds of physical and human capital stocks. - Telecoms infrastructure. • Small size limits the ‘accelerator’ effects of growth on e-commerce adoption. • Small size does not directly affect the adoption of e-commerce.

  19. Conclusions • Endogeneity between growth, resources and e-commerce affects adoption. • There is a ‘digital divide’ between small and larger states. • ‘Critical mass’ in telecoms, physical and human capital. • e-commerce needed to maintain the competitiveness of small states. • Most important for remote island states.

More Related