ICTs as Development Enablers: Do Developing Countries Respond

Differently? 

Presented by Harpreet KaurCPRSouth, August 26 -29, 2015, Taiwan

Authored by Prof. Simrit KaurProfessor,

Faculty of Management Studies, University of Delhi, Delhi, India

&

Harpreet KaurAssistant Professor,

Sri Guru Gobind Singh College of CommerceUniversity of Delhi, Delhi, India

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Structure of the Presentation

Background of the Study Objectives ICT Development Index IDI 2013 Role of ICT as Development Enablers

Methodology Empirical Results Major Findings

Policy Implications

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Background Lack of empirical research on the differential

impact of ICT on developing economies (Jorgenson & Stiroh, 1995; Mansell & Wehn, 1998; Pohjola, 2000, 2001; Haacker & Morsink, 2002; Goldman Sachs, 2000; Daveri, 2000; Bassanini et al., 2000, Indjikain & Siegel, 2005.)

Potential role of ICT as development enablers.

Impact of ICT on dimensions covered in the Millennium Development Goals (MDGs).

Objectives of the Paper:

Analyze the economic impact of ICT penetration across economies.

Study whether there is a differential economic impact of ICT between the developed and developing economies.

Explore the relationship between ICTs and human development using the Millennium Development Goals (MDGs) as the framework for assessment.

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IDI is a composite index that serves to monitor and compare developments in ICT across countries and gauge the digital divide.

ICT Development Index: IDI

IDI 2013: Findings The average value of IDI for all groups increased

over the period 2012 and 2013. The range and measures of disparity in IDI values

also decreased the most for the high IDI group. The range is not only the smallest – and widening for the LCC.

The top performers have highly liberalized and competitive ICT markets.

The majority of LCCs are in Africa closely matching the list of LDCs. However, there are also some non-LDCs among the least connected.

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Methodology The paper uses the neoclassical economic growth

model to capture the ICT effects on GDP. Y = f (GCF, LFPR, IDI, TO, IQ, D)

Specifically, the following equation has been estimated:

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All Countries HIC MIC LIC

(1) (2) (1) (1) (2) (1) (2)

LFPR 0.345(0.246)

2.153***

(0.486)0.191*

(0.106)1.620***

(0.411)2.776***

(0.722)-0.059(0.190)

-0.054(0.195)

GFCF -0.004(0.014)

0.011(0.020)

-0.046(0.045)

-0.011(0.018)

0.003(0.023)

0.040(0.026)

0.039(0.027)

IDI 0.150***

(0.025)0.123***

(0.042)0.071*

(0.042)0.097***

(0.036)0.038

(0.060)0.189***

(0.040)0.188***

(0.041)

Trade_Op -0.025(0.017)

-0.016(0.023)

-0.073*

(0.042)-0.026(0.024)

-0.030(0.030)

-0.038(0.029)

-0.038(0.030)

CPIATRS -0.004(0.041)

0.033(0.082)

-0.006(0.037)

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Table 1: Economic Impact of ICT Development Index

Table 2: Economic Impact of IDI Decomposed into Access, Use

and Skills Sub indicesAll Countries HIC MIC LIC

LFPR 2.198***

(0.446)0.210

(0.130)0.490*

(0.296)-0.055(0.194)

GFCF 0.013(0.019)

-0.048(0.047)

-0.026(0.026)

0.036(0.025)

Trade_Op -0.019(0.023)

-0.074(0.047)

-0.026(0.035)

-0.046(0.028)

CPIATRS -0.022(0.041)

0.020(0.060)

-0.013(0.035)

IDIAccess 0.055(0.038)

0.004(0.121)

0.100(0.081)

0.072*

(0.037)

IDIUse 0.021*

(0.012)0.023

(0.018)0.018

(0.016)0.044***

(0.016)

IDISkills 0.913***

(0.284)0.000

(.)0.265*

(0.147)-0.011(0.085)

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Table A1: Economic Impact of IDIOverall, IDIAccess, IDIUse and IDISkills

(with Interaction Terms)

Independent Variables All Countries

LFPR 0.417* (0.233) 0.406* (0.232) 0.387*(0.215)GFCF -0.010 (0.014) -0.004 (0.014) -0.006 (0.015)

IDI 0.176*** (0.045) 0.183*** (0.048)

IDI*Dummy-Middle -0.015 (0.057) -0.031 (0.060)

IDI*Dummy-High -0.103* (0.061) -0.113* (0.062)

Trade_Op -0.026 (0.017) -0.028 (0.017)

IDIAccess 0.051*** (0.017)

IDIUse -0.001 (0.006)

IDISkills 0.042 (0.135)

IDIAccess*Dummy-High -0.400** (0.171)

IDIUse*Dummy-High 0.034 (0.039)

IDISkills*Dummy-High 0.000 (.)

IDIAccess*Dummy-Middle -0.089 (0.086)

IDIUse*Dummy- Middle 0.021 (0.014)

IDISkills*Dummy- Middle 0.228 (0.729)

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Conclusions ICT development impacts all countries favorably. LICs and MICs too benefit from ICT development.

In fact, the economic impact of ICT is much higher in LICs as compared to MICs and HICs.

Each of the sub-indices of IDI, impacts per capita GDP differently across income groups. In MICs the economic impact of IDISkills is

positive and significant. For LICs IDIUse and IDIAccess impact GDP

significantly.

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ICTs as Development Enablers- Analysis based on Correlation

Coefficients

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GDPpc All Countries 0.7763*** 0.7611*** 0.8252*** 0.5528***

High Income Countries 0.6780*** 0.7224*** 0.6582*** 0.0677

Middle Income Countries 0.6016*** 0.6233*** 0.5576*** 0.4552***

Low Income Countries 0.4691*** 0.5839*** 0.2683* 0.2263

IFM All Countries -0.8244*** -0.8154*** -0.732*** -0.881***

High Income Countries -0.673*** -0.5894*** -0.602*** -0.510***

Middle Income Countries -0.773*** -0.722*** -0.630*** -0.823***

Low Income Countries -0.436*** -0.238* -0.255* -0.582***

Life Expectancy at Birth

All Countries -0.8317*** 0.8269*** 0.7545*** 0.8399***

High Income Countries 0.6601*** 0.7160*** 0.5649*** 0.3257***

Middle Income Countries 0.6446*** 0.6060*** 0.5173*** 0.6904***

Low Income Countries 0.4845** 0.3710* 0.1716 0.5830***

Prevalence of Undernourishment

All Countries -0.6210*** -0.6308*** -0.53*** -0.58***

High Income Countries -0.3469 -0.1779 -0.3601 -0.409

Middle Income Countries -0.5675*** -0.5343*** -0.509*** -0.492***

Low Income Countries -0.2575 -0.5416*** 0.0357 0.0077

ICT Development Index as Enabler of Human Development

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Thus ICT and Social Welfare in general are positively correlated.

ICT Development Index as Enabler of Human Development

Policy Implications Ensure penetration of ICT in both developing and

developed countries and that too by all stakeholders including governments, local population and businesses to maximize gains from usage.

Connect rural and remote areas having geographically dispersed and economically weak populations. Promote projects like ‘e-Choupal’. Which help enhance agricultural productivities and address rural-urban migration.

Financial support for targeted populations and encouraging shared access should also be promoted. 15

Policy Implications

MICs MICs should promote policies that encourage

skill development. Language and digital literacy levels in these

countries should be improved. Conventional literacy does not rule out poor ICT

literacy and skill levels. Thus policies promoting digital literacy need to be designed such as the ‘Digital India’ project.

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Policy ImplicationsLICs LICs should focus more on encouraging ICT

intensity and ICT readiness policies. Government action is necessary to address

digital divides especially in countries where there are sharp social, economic and geographic inequalities.

Efforts must also be made to encourage people to participate in the digital economy.

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Policy Implications: Accessibility and Intensity in LICs

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ICT Readiness or Access

Building a conducive environment that encourages fixed and mobile telephone subscriptions to go up.

Improving access to computers by households.

Making more households buy internet subscriptions.

Investment in infrastructure and access to internet, would create economies of scale. The country’s infrastructure plays a key role in promoting ICTs. Requirements for better networks range from proper buildings, to electricity and power supply, hardware, software and cables.

ICT Intensity

Encourage usage of internet amongst individuals by developing local content in the form of local news, entertainment and e-commerce sites.

Adopting policies that enable greater subscriptions to fixed and wireless broadband subscriptions.

Policy Implication: Affordability Broadband affordability: Policies promoting

affordability of broadband remains paramount, especially for low income populations.

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Countries with Highest Fixed Broadband Internet Tariffs (PPP $/month)

Policy Implication: Affordability Fixed Broadband Affordability:

Inter-Group Comparison: Average monthly fixed broadband prices (in PPP$) in developing countries are 3 times higher than in developed countries.

Intra-Group Comparison: Fixed broadband is more than 20 times more affordable for the richest 20 per cent of the population in developing economies than for the poorest 20 per cent.

Mobile-broadband plans: Handset based and computer-based services are about eight and six times more affordable in developed countries.

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Policy Implications: Regulation Effective Regulation: It is required to boost

competition and lower prices. A stable and predictable regulatory environment

that protects existing investments while creating room for new ones is among the most important factors promoting ICT intensity.

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The overarching policy implication is that ICT Development matters, however, one needs to work around the issues of affordability, competition and

regulation.

Thank You.kaur.simrit@gmai.com

har_preetkaur@hotmail.com

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