The 'New Economy' and Economic Growth in Transition Economies (original) (raw)
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The impact of ICT on growth in transition economies
2004
. The impact of ICT on growth in the new five EU member countries (Czech Republic, Hungary, Poland, Slovakia and Slovenia) was higher than the average for the former EU-15. Hence, ICT -through both the capital deepening and TFP growth in ICT-producing sector -contributed to convergence of the level of income between those countries and the EU-15. This was however not the case for Bulgaria, Romania, and Russia, where ICT contribution to growth was lower than in the EU-15. ICT thus led to income deconvergence. Future growth prospects of the CEE countries, including Russia, will largely depend on further ICT investments and an ability to ensure their productive use on a macro, industry and micro level. The paper speculates that ICT capital will have a significant contribution to long-term growth in Poland, taken as a proxy for other CEE countries, on the level of 15% of the projected average annual GDP growth of 4% until 2025. This projection does not however take into account the potential for emergence of new applications of ICT, which could stimulate further increases in aggregate productivity. Neither does it measure the possible contribution from TFP growth in ICT sector and from the spillover effects of ICT production and use. The paper argues that the potential of ICT will not however be realized without changes in business models and an increase in the quality of human capital and ICT skills. On the macrolevel, as indicated by the New Economy Indicator, ICT will not benefit CEE countries without them making consistent progress in economic, institutional and regulatory environment.
The role of ICT development in boosting economic growth in transition economies
Journal of International Studies, 2021
During the last decades, the substantial development of information and communication technologies (ICTs) has led to a number of economic and noneconomic changes in all countries worldwide. The ICT progress can significantly influence macroeconomic outcomes and it is widely recognized as an important factor of the transition toward a new economic system. This transition was especially challenging for former command economies. Since these economies are characterized by relatively low standards of living, poor infrastructure and continuous changes in economy structure and regulatory framework, the ICT development can have adverse effect on economic activities. In that sense, this study addresses the role of ICT development in enhancing the economic growth in 11 EU transition economies over the 2000-2019 period, using the linear regression analysis. The obtained results suggest
Does ICT Investment Matter for Growth and Labor Productivity in Transition Economies?
SSRN Electronic Journal, 2000
The paper shows that the contribution of investment in IT hardware, software and telecommunication equipment to output growth and labor productivity between 1995 and 2000 in most countries featured in the study was much higher than what might be expected on the basis of the level of their GDP per capita. This may suggest that the transition economiesthrough the use of ICT -are benefiting from the technological leapfrogging to increase the growth rates in output and labor productivity and hence accelerate the process of catching-up.
ICT and Economic Growth Nexus: Case of Central Asian Countries
Procedia of Social Sciences and Humanities, 2021
The Government of Uzbekistan declared the year of 2020 as “The Year of Science, Education and Development of the Digital Economy” and is implementing the State Program, aiming at to liberalize the economy, improve market related incentives, encourage private enterprises, to reduce the role of the public sector by introducing ICT and Internet, developing digital economy. In order to understand the causal relationship between ICT investment and economic growth researchers have exert many effort in the world. The results are different: in developed countries the impact of ICT on economic growth is more powerful than in developing countries. This paper aims at finding and measuring causality between Economic growth and ICT development in emerging economies of Central Asian Countries by using panel data over the period of 19 years from 2000 – 2018. The research findings revealed that inflation, trade openness, final consumption expenditure and unemployment impact significantly on GDP ...
On the Pulse of ICT Revolution, Productivity, and Growth: Macedonia versus European Union
2016
Information and Communication Technologies (ICTs) have become more accessible, more powerful and more widespread. Yet, the use of ICTs is not an end in itself. The impact that such technologies have on the economy and society is what ultimately matters. Understanding the economics of ICTs requires a deep and thorough knowledge of how the new technology generates the economic impacts. The ICT revolution holds the transformative potentials, offering many promises and benefits, even while posing severe risks and challenges. Therefore, it is of great importance and still a challenge to measure the capacity of countries to leverage ICTs for increased competitiveness and wellbeing. Aimed at reaching such a complex task, this paper employs the extensive data compendium of the Networked Readiness Index (NRI) 2015 and a set of supplemental data analysis tools (descriptive statistics, five-number summary statistics and a Box & Whisker plot, Euclidean and statistical distances, hierarchical cluster analysis and a corresponding dendrogram) to estimate both the performance of Macedonia in the NRI and the country's relative position visà-vis the EU member states. Looking at the trends since 2012 reveals that Macedonia is one of the ten most improved countries in their overall NRI performance. Nevertheless, the findings suggest that the country is lagging behind the European average in most indicators. The EU member states with the shortest statistical distance from Macedonia are Croatia, Cyprus, Romania, Hungary and Slovenia. Quite the reverse, the Nordics (Finland, Sweden and Denmark) and Western Europe (Luxemburg, Netherlands and UK) are the most 'distant' countries from Macedonia. These latter findings confirm the results obtained by the five-number summary statistics and the hierarchical cluster analysis.
ECONOMIC GROWTH AND INFORMATION TECHNOLOGIES
The most important task facing Russia at the present time is to achieve economic growth. These words are pronounced with equal frequency by westernizing liberals, centrist advocates of a strong state, social democrats, communists and nationalists. The President endorses the idea, as do members of the Government. The President’s annual Message to the Federal Assembly set the task of doubling GDP within the next 10 years, which would require a 7% annual rate of growth. There is, of course, an opposing view that prefers institutional reform to economic growth. Ye. T. Gaidar is its most categorical proponent. This position is difficult to refute by theoretical means alone, arguing solely on the basis of economic premises. Indeed, recovery from the recession of the 1990s has been largely exhausted as a source of growth; high oil prices cannot be maintained indefinitely; and the ill-defined, intermediate condition of our economy today hardly provides us a way to move forward quickly. It is difficult to support the “institutional reform” point of view, however, once one looks beyond purely economic considerations. 1. Institutions can be reformed, to the extent that society allows this to happen. More precisely, there is a maximum possible lag increment between legislative innovations and the institutions that actually exist in society. The size of that lag increment depends on many factors (see below), the most important of which is the degree to which the population is law-abiding. Unfortunately, Russia is not a highly law-abiding country, so the lag increment is small. It would be impossible to replicate in Russia what was done in Japan, which in 1898 adopted the German Civil Code. It is evident that the failures of reform during the 1990s were associated not only with the incomplete nature of reform measures in some regions, but also with the phenomenon of excessive reform, which took place in others. Laws and regulations that differ significantly from the concepts people have (“running ahead” of them), produce quite different, sometimes diametrically opposite, results from what their authors expected. 2. Economic growth increases the quantity and “quality” of support for reform on the part of those who experience material gains, but it also raises the level of faith in reform even among layers of the population who have not actually benefited, thus increasing the size of the lag increment. Reforms that were impossible to implement during the period of economic recession have become quite practicable in recent years. Thus, not only does economic growth depend on the success of institutional reform, but, conversely, the success of institutional reform is largely determined by economic growth. A substantial portion of public debate in Russia revolves around what factors determine the speed of economic growth, and how to bring about high rates of development in our economy. There are many recipes. The advocates of a strong state and the “dirigists” insist that government intervention in the economy should be increased. The libertarians, by contrast, recommend cuts in taxes and state spending. The institutionalists talk about the need to reform institutions and combat corruption, while the “techies” push the development of science and technology; and so on. None of these prescriptions should be rejected out of hand. Regional distinctions, such as the dynamic development of East Asian countries or Latin America’s endless running in place, clearly demonstrate the role of culture and institutions. There is a well-established correlation, shared by different countries, between economic failure and the level of corruption. It is also an irrefutable fact that in countries that have caught up economically, the state has played, and continues to play, a big role both in the creation of market institutions, and directly in the economy. But the opposite tendency is also observed: it became very apparent during the 1980s and 1990s that the reduction of government spending and superfluous social programs promotes economic growth. Particularly convincing is the case of Ireland, which sharply cut government spending and turned from one of the poorest nations of Western Europe into one of its economic leaders, in the space of ten years. On the other hand, Finland and Sweden, with government spending in the range of 45-50% of GDP or higher, are among the most competitive economies in the world. Neither should any of these recipes be adopted without reservations. Many of them are more in the nature of good intentions, than real recommendations. One might say that it would be very useful to abolish, tomorrow, those Russian traditions that impede economic development, such as negligence in carrying out one’s obligations, the habit of acting in circumvention of the law, etc. But popular traditions are the hardest thing to change, while forcibly effecting such changes could lead to unexpected and grave consequences, insofar as our virtues are a continuation of our faults. Other prescriptions, which appear more realistic on the surface, give rise to just as many objections – not only because they contradict one another, but due to more specific circumstances. For example, a reasonable and long overdue reform of the civil service, entailing an increase in civil service pay rates, runs smack into the impossibility of implementing such a pay raise, without corresponding pay scale increases for military and other federal budget sector employees (the division of government employees into civil servants and budget sector workers being somewhat arbitrary), with the attendant steep increase of state spending and acceleration of inflation. Therefore we shall take a purely empirical approach to the problem of economic growth, without paying attention to any previously formulated premises. We shall look exclusively at data from the most recent period, since it seems obvious that no prescription for growth is valid for all periods of time. For example, in the industrial age Keynesian recommendations were helpful for emerging from the Great Depression of 1929, while monetarist policies – the very opposite – charted a pathway out of the 1973 crisis. Moreover, current trends of globalization and “post-industrialization” may well have altered the way in which economic growth depends on various factors. Selection of a method for measuring national economic growth presents a special problem. Many economists question GDP per capita, the most widely used indicator. There are many arguments against it: the paradox of the professor and his housekeeper, its dependence on the method of data analysis used, the imprecision of estimates, its undercounting of the public sector, and so forth, up to and including proposals to count female beauty as part of the gross product. Many other, more refined measures have been developed. Nonetheless, we shall use GDP per capita (adjusted for parity of purchasing power) to express the success of transitional “semi-market” economies. One reason for this choice is that none of the new measures has become generally accepted, so the choice of any one of them could become a factor affecting the analysis. Moreover, the primary data estimates for all aspects of the performance of transitional economies with a large informal sector have such a large margin of error, that employing more refined indicators will not make the calculation of correlations more precise. The main way to minimize the margin of error is to use average GDP growth values over long periods of time (at least 4-5 years). For transit economies (and not them alone), however, even this does not provide complete protection against mistakes. The short period of our analysis includes many events on the scale of the Asian crisis of 1997, the Russian crisis of 1998, September 11, 2001 and its consequences, etc., which makes the estimates highly dependent on the particular choice of a period for which to compute GDP growth. Furthermore, part of the economic recession in Russia and other former socialist countries during the initial period of reform was actually not a true recession, but reflected a change in the “unit of distortion”: in the Soviet economy, the main distortions were attributable to upward exaggeration of data, whereas in the post-Soviet economy the reverse has been the case – the understating of performance for purposes of evading taxation. Conversely, part of recent years’ economic growth likewise should be attributed not to real growth, but to the legalization of incomes as companies exited the informal sector.
The New Economy in Development: ICT Challenges and Opportunities
Palgrave Macmillan, 2006
The series examines technological change in the larger global context by identifying where the markets are, who is specializing in what areas of technology and why, what is the nature of global trade in technologies, and what are some of the social and political challenges posed by such change. Relationships between the OECD and rapidly growing Asian and Latin American economies are brought out by this series. At the same time, the series will also address the issue of why some regions such as Africa and the Middle East lag behind. The question of whether technology is important for development, and how various governments have targeted technology development, whether through education, skill development, or R&D also adds to the diversity of the series. The series includes comparative and regional studies, including single-country case studies of large economies such as India, China, Japan, South Korea, and Brazil. While no single approach or methodology is used exclusively, scholars within the series rely on political economy approaches that are sensitive to institutional and historical realities when analysing specific countries/regions or technologies.
ICT Diffusion and Economic Growth: A Comparative Study Across Economies
Journal of Economics and Business, 2020
The development in information and communication technology (ICT) has opened up many endless opportunities, enabling broad communication and easy access to knowledge and information. This paper aims to offer a discussion regarding the economic impact of ICT on 89 countries divided into 7 low-, 20 lower middle-, 19 upper middle- and 43 high income economies. Accordingly, it studies the impact of investment growth in ICT and non ICT assets on economic growth for a period 1990 to 2018, thereafter, it examines the economic impact of using three ICT infrastructure indicators in order to tests the effective usage of ICT investment in those economies for the period 2000 to 2018. The methodology of this research follows a deductive approach and uses a panel data estimation. The results show that ICT capital still plays a major role in the richest countries in the world, while there is no significant impact of ICT in the Upper middle and low income economies and weak significant in lower middle income economies. Regarding the impact of using ICT, the results for four income groups, indicate that the level of the ICT infrastructure effect varies according to the indicator studied and middle income economies are gaining more from the use of ICT infrastructure than high income economies with a positive and strong effect on economic growth.<br><br>
The Role of Information Technology in Transition Economy Reforms
Information technology and activities are considered as a key factor for necessary revitalization and modernization of economic structure of transition countries of Central and East Europe at the beginning of the 21st century. Information sector is not only a sector of economy that is supposed to increase its share in the gross domestic product and employment more and faster. The role of information and the complex of surrounding activities is to initiate the changes of nature of economic and social life as a whole and successful transition from an industrial towards the information society and economy.