Innovation and Economic Development

Innovation and Economic Development

The Impact of Information and Communication Technologies in Latin America

Edited by Mario Cimoli, André A. Hofman and Nanno Mulder

Information and communication technologies (ICT) are spreading fast across Latin America and the Caribbean. This trend has brought about important economic and social changes, which have largely gone unmeasured until recently. Here, analysts from the United Nations Economic Commission for Latin America and the Caribbean along with other distinguished scholars in the field of ICT, growth and productivity provide theoretical and empirical insights to the debate on the role of ICT in economic development.

Chapter 8: ICT and Knowledge Complementarities: A Factor Analysis on Growth

Marco Capasso and Nelson Correa

Subjects: development studies, development studies, economics and finance, economics of innovation, innovation and technology, economics of innovation, technology and ict


Marco Capasso and Nelson Correa* INTRODUCTION 1 Many studies have tried to measure the impact of information and communication technologies (ICT) on economic growth. There are several ways to determine this impact: growth accounting exercises, panel data regressions, mathematical simulations and so forth. Most of them consider ICT as having a direct impact on growth. They assume that the simple accumulation of ICT goods leads to a direct positive impact on some income measure. This way of measuring is not precise, however, as it neglects the contribution to the knowledge base. ICT should not be considered a mere capital input, but rather both a capital good and an input to knowledge creation. In this paper, we focus on measuring the impact of ICT on economic growth only through their contribution to knowledge. Hence, instead of concentrating our attention on the accumulation of ICT goods, we assess the contribution of ICT use to the knowledge base and then the contribution of the knowledge base to economic growth. We thus study two important links to evaluate the impact of ICT use on economic growth. The first link acts between ICT and knowledge, while the second connects knowledge and GDP growth. After measuring both effects, we determine the part of the contribution of ICT to economic growth that operates through knowledge. While nobody today is discussing the importance of knowledge for economic growth, the mathematical formalization is still a point of conflict. In the following section, we introduce knowledge as an input in...

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