The Role and Impact of Ict on Businees Growth

Topics: Economic growth, Economics, Developed country Pages: 15 (4671 words) Published: April 14, 2011
(The Role and Impact of ICT on Economy Growth)
KELLY WEE KHENG SOON (Student ID: 012010110116)
(DCT 5033: Managing Information System and E-Commerce)



1.0 Introduction
2.0 Literature and theories
3.0 Role and Impact of ICT on Economy Growth
3.1Role and Impact of ICT investment
3.2Measurement of ICT contribution to economic growth
3.3Policy implication boosting economic growth
4.0 Future Research
5.0 Conclusions
6.0 References


Use of information to the discretion of the prediction of economic growth driven by investments in the Information and Communication Technology(ICT). This paper discuss on the use of ICT that contributes to the economic growth and how it being measured. Prediction analysis resulting to empirical studies and research had been carried out between ICT and economic growth found there is both mixed results depending on the methodology of the research engaged and geographical landscape or situation that should be considered. The analysis of estimates reveal a significant impact on economic growth of investments in ICT towards specific region implies whereby countries seek to enhance their economic growth, they need to implement specific policies that facilitate investment in ICT. A proposed future research has been made in this paper that could help to ensure the role and impact of ICT to spur the economy growth with the continuing trend that is growing is also given.

Keywords: ICT, economy growth

This research paper is to examine whether ICT role and impact to the economy growth. Though there is so many debate about whether it does help in the progress over the past decade on the increase in the impact of economy and the way people work, communicate and spend time across countries around the world, however, research will explain that in the past decade several methods have been used to analyze the impact of ICT on economy growth. Studies throughout 1990s showed that increasing investment in this field constantly resulted in emergence of positive relationship between economic growth and information technology. However, there is much research is needed due to the challenges to ensure how much ICT has contributed to economic growth to the country as well as the global levels. Study is needed to investigate the impact of ICT on economic growth on a global basis by examining all countries with significant expenditure on ICT over the past decade.

This study aims to investigate the relationship between economic growth and ICT in developed and developing countries as well. The methodology of “Measuring the contribution of ICT to economy growth and productivity” is based on original work by Solow (1957) and (Jorgenson and Griliches (1968)) and later extended by (Alia Oliner and Sichel (2000) ) and (Jorgenson and Stiroh (2000)). ICT can impact economic growth through four major channels referred to by (Jalava, Pohjola 2002): (i) Production of ICT goods and services, which directly contributes to the aggregate value added generated in an economy; (ii) Increase in productivity of production in ICT sector, which contributes to overall productivity in an economy Total Factor Productivity (TFP); (iii) Use of ICT capital as input in the production of other goods and services; (iv) Contribution to economy-wide TFP from increase in productivity in non-ICT producing sectors induced by the production and use of ICT (spillover effects). One of the example looking into Finland economic growth based on analysis by (Jalava, Pohjola 2005) that ICT is the source of output and also productivity growth to Finland thus impacting the improvement of the GDP and economic growth.

In developing countries, SMEs industries are challenged by the globalization of production and shift in the importance of the various determinants to competitiveness. By spreading...

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