Contribution of Information and Communication Technologies to Growth

Contribution of Information and Communication Technologies to Growth is part of the World Bank Working Paper series. These papers are published to communicate the results of the Bank's ongoing research and to stimulate public discussion. The worldwide development of information and communication technology (ICT) has accelerated dramatically over the past decade. Technological advances and increased competition have led to falling prices for ICT goods and services, which has provided a strong incentive to replace other forms of capital and labor with information technology equipment. Increased ICT production and use has the potential to create job opportunities, transfer skills, and increase efficiency and transparency in politics and business, and therefore, contribute to economic growth. This paper focuses on the linkage between ICT and output growth. It summarizes findings in the literature on the contribution of information and communication technology to economic growth arising from capital deepening and increases in total factor productivity. The paper contains: the methodologies used to evaluate the different ways ICT influences productivity growth; a critical assessment of the magnitude of ICT's contribution to growth in various countries; a summary of the key factors that increase and obstruct ICT expansion; and an outline of the challenges developing countries face in maximizing ICT's contribution to growth and policy recommendations aimed at surmounting these challenges.