Diffusion of ICTs across OECD Countries, and Economic Benefits

‘Despite the importance of ICT, there continue to be marked differences in the diffusion of ICT across OECD countries,’ notes the Main Findings section of the report. ‘New OECD data show that the United States, Canada, New Zealand, Australia, the Nordic countries and the Netherlands typically have the highest rates of diffusion of ICT. Many other OECD countries lag in the diffusion of ICT and have scope for greater uptake. It is likely that the largest economic benefits of ICT should be observed in countries with high levels of ICT diffusion. However, having the equipment or networks is not enough to derive economic benefits. Other factors, such as the regulatory environment, the availability of appropriate skills, the ability to change organisational set-ups, as well as the strength of accompanying innovations in ICT applications, affect the ability of firms to seize the benefits of ICT. Consequently, countries with equal ICT diffusion will not always have similar impacts of ICT on economic performance’.

This pattern is explored in much more depth in Chapter 1: ‘Why is the diffusion of ICT so different across OECD countries?... From a firm’s perspective, high costs are particularly important, as they affect the possible returns that a firm can extract from their investment. Firms do not only incur costs in acquiring new technologies, but also in making it effective in the workplace, and in using the technologies on a daily basis. Costs related to personnel, telecommunication charges and organisational change are therefore also important… The costs of telecommunication are also important, as they affect the use of ICT in networks. This is illustrated by the take-up of the Internet in different OECD countries. Countries with lower access costs typically have a higher take-up of the Internet…..The higher price levels in certain OECD countries may also be associated with a lack of competition within countries.’

Source: ‘ICT and Economic Growth: Evidence from OECD Countries, Industries and Firms’, OECD 2003. http://www.oecd.org

ICT Investment, Regulatory Environment and Productivity Growth

Drawing on OECD research and new firm-level studies undertaken in Australia, the United Kingdom, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Sweden, Switzerland and the US, the report goes on draw a connection between the regulatory environment, levels of ICT investment and productivity growth, and then reaffirms a number of policies to help decision-makers seize the benefits of ICTs and foster economic growth. It notes that productivity growth in countries such as the US, Australia and Canada with a record of strong investment in ICT has remained robust despite the recent economic slowdown. By contrast, productivity growth in some other countries has weakened, in spite of investment in ICT.

To make effective use of ICT investment, the report observes, companies need to be able to innovate and adjust their organisational structures and workforces to new working methods. With ICT networks now spreading throughout much of the business sector in OECD countries, it recommends governments to focus on ensuring that the right regulatory environment is in place to reap maximum advantage from them.

Source: ‘ICT and Economic Growth: Evidence from OECD Countries, Industries and Firms’, OECD 2003. http://www.oecd.org

Resources:

Excerpts from ‘ICT and Economic Growth: Evidence from OECD Countries, Industries and Firms’ republished with kind permission from OECD.

• OECD http://www.oecd.org