ICT and Global Economic Growth Contribution, Impact, and Policy Implications

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WB-KMV-SEPTEMBER 16-2004. 2. The ICT Revolution and Economic Growth (2). . . . . PROCESS. . . Info. Yield. Innovation Progress Drastic advancement in ICT items execution (with the processor chip at its center: Moor\'s Law) 1981: 29,000 transistors (i8088) 2004: 125 million transistors (Pentium 4) Dramatic decrease in IT equipment cost (by 2000 times more than 40 years, 1960-2000) New applications (the

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ICT and Global Economic Growth Contribution, Impact, and Policy Implications eDevelopment Services Thematic Group, Informatics Program, ISG The World Bank September 16 2004 Speaker: Khuong Minh Vu Research Associate, Harvard University WB-KMV-SEPTEMBER 16-2004

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The ICT Revolution and Economic Growth (2) INPUT OUTPUT PROCESS Technology Progress Drastic advance in ICT items execution (with the processor chip at its center: Moor's Law) 1981: 29,000 transistors (i8088) 2004: 125 million transistors (Pentium 4) Dramatic decrease in IT equipment cost (by 2000 circumstances more than 40 years, 1960-2000) New applications (the Internet) ICT entrance (1990-2000) PC: 7.6 circumstances Mobile Phone: 57 times The Internet: 1600 circumstances Number of Internet hosts: 300 circumstances Global Phenomenon Expenditures on ICT Size and development: from $1,300 billion in 1992 to $2,400 billion in 2001 Way of life Time with PC Communications & Learning Growth in ICT area Ireland, India, Taiwan, Korea Growth in ICT-utilizing segments Banking, Health Care, Education, Consulting Manufacturing division ICT-empowered organizations (Google, Allibaba.com) National monetary development Ireland, US, UK, Australia, Canada, Finland WB-KMV-SEPTEMBER 16-2004

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The ICT Revolution: Drastic Decline in IT Hardware Price (2) Source: BEA information WB-KMV-SEPTEMBER 16-2004

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The ICT Revolution: The Pace of Digitization 1990-2000 The Average Global Economic Growth: 3% The Average Growth in Total Trade: 5% The Average Growth in ICT Spending: 8% The Pace of Globalization = 5%-3%=2% The Pace of Digitization = 8%-3% = 5% WB-KMV-SEPTEMBER 16-2004

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ICT improves the Quality and Timeliness of Decision Making Risk ICT Certainty Uncertainty Ignorance WB-KMV-SEPTEMBER 16-2004

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Research Focus and Main Results Global Picture of ICT as a Source of Growth Magnitude of ICT commitment to development Dynamics: worldwide positioning, union versus uniqueness slant Determinants of Variations in ICT Contribution to Growth Impact of ICT on Economic Growth Share of ICT Contribution in yield and ALP Growth Effect of ICT on Growth: Quantity, Quality and TFP Growth Policy suggestions ICT generation versus ICT utilize Policy structure for advancing ICT infiltration ICT for Development WB-KMV-SEPTEMBER 16-2004

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ICT as a Source of Growth: ICT and Global Capital Stock WB-KMV-SEPTEMBER 16-2004

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ICT As a Source of Output Growth: 1995-2000 versus 1990-1995 WB-KMV-SEPTEMBER 16-2004

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The Global Pattern of ICT Contribution to Growth: 1995-2000 versus 1990-1995 ICT Contribution to ALP Growth ICT Contribution to Output Growth WB-KMV-SEPTEMBER 16-2004

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The Global Dynamics of ICT Contribution to Growth: 1995-2000 VS. 1990-1995 WB-KMV-SEPTEMBER 16-2004

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ICT Contribution to Growth: Convergence and Divergence Trends WB-KMV-SEPTEMBER 16-2004

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Determinants of Variations in ICT Contribution to Output Growth Income level Education Institutional quality Integration (Openness) English familiarity Furthermore, effect of institutional quality, combination, and English familiarity altogether quickens after some time. WB-KMV-SEPTEMBER 16-2004

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Share of ICT Contribution in Output Growth WB-KMV-SEPTEMBER 16-2004

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Effect of ICT on the Quality of Growth An expansion in ICT Capital Stock per capita by 10% adds about 0.1 rate indicate yield development, controlling for development in capital and work contributions For all the example, ICT Stock per capita has a positive however not and measurably noteworthy connection with the "net" TFP development (TFP development less the commitment of changes in capital and work quality. This relationship, in any case, is measurably huge for the G7 amass. WB-KMV-SEPTEMBER 16-2004

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Policy Implications ICT Production versus ICT Use The Dynamics of ICT Penetration Framework for Policy Agenda to Promote ICT Penetration ICT for Development Exploiting the Internet Revolution Utilizing the Internet to Promote Local Economic Development WB-KMV-SEPTEMBER 16-2004

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Success (p) g S  + e S  Market instability Subsidizing the ICT-Producing Sector e S  With S units of alarm assets, the administration considers two options Failure (1-p) Fostering ICT Diffusion (a+) S  Y* Policy Implications: ICT Production versus ICT Use What ought to be of a higher Priority for Governments WB-KMV-SEPTEMBER 16-2004

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M t+1 45 0 - Line High H Q Policy Focus: Shifting M to the Left L X M C M t Policy Implications: The Dynamic Model of ICT Penetration Promoting Investment in ICT: Benefits versus Costs WB-KMV-SEPTEMBER 16-2004

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Making the instructive segment a noteworthy concentration of ventures from all sources. Changing the instruction division with vital ventures to make it a noteworthy motor for driving the economy towards an information based economy. Propping up ICT-related abilities trainings with broad backings. Empowering rivalry among territories on ICT dissemination and observing the adequacy of their ICT use for advancement. Opening up the local ICT market and cultivating rivalry among ICT hardware sellers. Changing media transmission with administrative changes to cut down telecom expenses and improve the nature of administration. Advancing the development and energy of ICT-related administrations, which help firms and family units reduce the expenses of interest in ICT. Skills Benefits Costs Concepts Understanding potential utilizations of ICT and its effect on monetary development and improvement. Perceiving the hazard and opportunity expenses of financing the ICT-creating segment. Appreciating the profound determinants of ICT dispersion and considering them as the fundament to the administration ICT plan. Enhancing the general business atmosphere: openness, rivalry, straightforwardness, and administration. Advancing e-government, online business, and other Internet-empowered administrations. Upgrading systems administration and collaboration among firms and neighborhood experts through Internet-empowered bunch activities Providing motivations for reciprocal speculations, which are basic for making interest in ICT more beneficial. Making/supporting key interests in telecom foundation: transfer speed limit of association with the worldwide Internet spine, and of national long-separate media transmission systems. Advancing the quality and inescapability of access to ICT administrations, particularly the Internet Reforming the administrative system identified with media transmission framework advancement and operation. Foundation Conditions Policy Implications: Framework for ICT Policy Agenda (1) WB-KMV-SEPTEMBER 16-2004

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Policy Implications: Framework for ICT Policy Agenda (2) The centrality of the idea issues ICT-delivering area versus ICT applications Increasing the quantity of individuals making "benefits" from putting resources into ICT is more essential than simply pushing for here and now ICT infiltration "Advantages" is more vital than "expenses" in advancing the entrance of ICT Promoting ICT infiltration ought to fortify market drives as opposed to misshaping them Knowledge and Wisdom versus Data and Data WB-KMV-SEPTEMBER 16-2004

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Policy Implications: Exploiting the Internet Revolution Fostering, Incentives Financial bolster Policy Focus Benefits from the Internet Fostering, Incentives Financial bolster Wisdom Knowledge Evaluated Understanding: ought to; ought, worse, best. How Participation, Facilitation Information What, Where, When, Who Knowledge Hierarchy WB-KMV-SEPTEMBER 16-2004

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Thank you for your consideration WB-KMV-SEPTEMBER 16-2004

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