THE IMPACT OF ICT ON ECONOMIC GROWTH (REVIEW )
In the last three decades, numerous studies have been undertaken to examine the impact of ICT on a country’s economic performance, fuelled largely by Robert Solow’s (1957) seminal work. In
the paper, Solow argued that the United States (US) economic growth during 1950s and 1960s was attributed mainly to ‘technological change’ as opposed to the conventional factors of labour
and capital. Since then, various firm, industry and country level studies have been undertaken on this issue, primarily for developed countries, whilst developing countries have been studied
Some of the studies had found positive and significant relationship between ICT and economic growth. In early 1990s, Lau and Tokutsu (1992) investigated the contribution of ICT investment on
economic growth in the US for the period 1960 to 1990. The empirical result showed that nearly half of the growth in the aggregate national output in the US was attributed to ICT investment
than non-ICT capital or labour. Schreyer (2000) estimated the impact of ICT on labor productivity amongst G7 nations. He found that the employed sample countries (i.e. Germany, Canada, Italy,
Japan, US and UK) had benefited significantly from ICT investment in terms of remarkable average annual labour productivity growth over the period 1990 to 1996. Daveri (2000) updated
Schreyer’s (2000) research work and extended it to another eleven OECD countries. Apart from using similar data, Daveri also added software to ICT capital. Here, the author found similar results
– ICT contributed substantially to economic growth during the later part of 1990s for all the sample countries (though the magnitudes differ greatly across the countries).
Kim (2003) examined the impact of ICT on productivity and economic growth in Korea during 1971 to 2000 sample period. The results showed that ICT capital contributed 16.3% to the output
growth and has had strong positive effect on the growth of labor productivity in the long run.
In sum, the issue of ICT and economic growth has received much attention with respect to the developed countries as opposed to the developing countries.
Source: Mudiarasan Kuppusamy , et al. “WHOSE ICT INVESTMENT MATTERS TO ECONOMIC GROWTH: PRIVATE OR PUBLIC? THE MALAYSIAN PERSPECTIVE”, The Electronic Journal on Information
Systems in Developing Countries, ISSN: 1681-4835 www.ejisdc.org http://www.ejisdc.org EJISDC (2009) 37, 7, 1-19 4
This TMA requires you to write a structured essay of no more than 1200 words, in which you attempt to answer the following questions:
1. Discuss the relationship between ICT and economic development using indicators published in international publications.
2. Explain the impact of ICT on economic development in the developing countries showing the economic theory that can be applied herein.
Guidance notes for TMA:
The above questions should be discussed based on what you learned in Ch. 1 and Ch.2 listed in your course materials DD202A. You are going to discuss the impact of ICT on economic
development in developing countries. The challenge in your essay is to cover its most significant aspects within the specified word count. Your essay should be well organized, with a clear-cut
layout of an introduction, a body and a conclusion.
In your introduction, you need to provide a definition of the new economic change showing the importance of ICT on economic growth and productivity. Your introduction, as well as other parts
of your TMA, must be based on up-to-date data with complete references. It is probably best to spend no more than 350 words on this part. (15 points)
In the essay’s body, you need to answer the above two questions and elaborate on the points you mentioned in the introduction. You must first discuss the theoretical background that link the
ICT with economic development showing the literature on information system in developing countries and the positive or negative relationship between ICT and economic development. (do not
use the information and indicators given in the above article).
You will need to use published data and information in order to answer the above two questions. Indicators can be found in the annual reports of international development agencies such as
UNDP and World Bank. In this part of your essay try to consider the economic and social implications of the ICT in developing countries. You should state whether or not you think there are
positive, negative or dubious socioeconomic benefits arising from the ICT. You may translate your data into diagrams and match the theory with the application you are discussing. This part of
your essay has the weightiest part of the TMA and carries the highest proportion of marks. You should spend no more than 500 to 600 words on this part of the TMA. (40 points).
Your conclusion should include a summary of what you have discussed in your essay showing how the policy makers may benefit from your analysis and showing what benefits can be obtained
from the ICT.
The assessment of the quality of your essay will be based on how you convince the reader (grader) about your knowledge and understanding of the topic. Attempt to use your own words and
avoid using a copy-paste. (25 points)
20 marks will be allocated equally for presentation, references, word count and E-library.