A Time Series Analysis of International ICT Spillover

A Time Series Analysis of International ICT Spillover

Juan Juan Zhang (National University of Singapore, Singapore) and Sang-Yong Tom Lee (Hanyang University, Korea)
DOI: 10.4018/978-1-60566-138-4.ch008
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This article studies the role of international spillover of information and communication technology (ICT) in economic growth. We examine the performance of ten countries from 1982 to 1999. By empirically analyzing the relationship between total factor productivity (TFP) and domestic and foreign ICT investment with time series analysis tools, we find limited evidence that there exist international ICT spillovers for a group of countries. Further, we discuss the possible ICT policies to improve productivity and balance out a win-win situation for both ICT spillover sending and receiving countries.
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Nowadays, ICT is considered an extremely important factor that contributes to the accelerated rate of productivity of a nation, especially in many newly industrialized economies (NIEs) and developing countries. ICT is the combined utilization of electronics, telecommunications, software, networks, and decentralized computer workstations, and the integration of information media (Granville, Leonard, & Manning, 2000), all of which impact firms, industries, and the economy as a whole. ICT is comprised of a variety of “communication equipment” which includes radio, TV, and communication equipment and software. Therefore, ICT investment includes “investments in both computer and telecommunications, as well as related hardware, software and services” (Dedrick et al., 2003, p. 4).

In recent years, the combination of computer and telecommunication equipment helps and enables businesses and organizations to share and exchange huge amounts of information. It also eliminates vast amounts of paperwork and speeds up transaction processes by the Internet, Intranets and other networks. In addition, technology and computer production has been a high growth sector in many countries. The ICT industry itself can be a source of economic growth and jobs (Kraemer & Dedrick, 2001). Consequently, it is widely believed that ICT investment helps to enhance productivity and economic growth.

ICT capital exhibits both traditional and non-traditional effects (Dedrick, et al., 2003). As traditional capital, ICT’s returns accrue primarily to the firms, industries, or countries that make the investment, and diminish with continuing investment. Contrarily, due to its informational and transformational roles, ICT capital is similar to knowledge capital (Dedrick et al., 2003). ICT capital, if used properly, facilitates knowledge creation. We define knowledge capital as the data, information, knowledge, and wisdom necessary to support and grow an organization or economy. ICT enhances the productivity of employees, and therefore contributes positively to the generation of knowledge capital. Since knowledge capital is not rivalrous and has public goods properties, it leads to potential “spillovers.”.

Grossman and Helpman (1991) define spillovers as follows: “By spillovers, we mean that (a) firms can acquire information created by others without paying for that information in a market transaction, and (b) the creators (or current owners) of the information have no effective recourse, under prevailing laws, if other firms utilize (the) information so acquired.” From this definition of spillover, one may derive that ICT spillover is an increase in social benefits without compensating the ICT investors. If we regard investors as a national economy as a whole, then we have the concept of “international ICT spillover.” In other words, international ICT spillover is an increase in national productivity due to ICT investments in foreign countries.

ICT spillover emerges when social returns on investment exceed their private returns, creating situations in which investment in ICT becomes an innovator or investor, thereby, also benefiting other parties (Leeuwen & Wiel, 2003). “The Information Technology Boom” has given rise to many discussions about the potential of ICT to yield production externalities. Production spillovers or externalities can show up in the form of rent (pecuniary) spillovers or in the form of so-called technology/knowledge spillovers. These arise from the fact that knowledge and technology have some public good characteristics—knowledge capital can be owned and used by many parties simultaneously, leading to potential spillovers (Leeuwen & Wiel, 2003).

Globalization and rapid communications among innovators in different locations facilitate the process of invention and the spread of new ideas across different countries. Scholars have concluded that R&D is transferred from the innovating country to other countries mainly through trade, which helps to stimulate the receiving countries’ economic growth. Many researchers have also tried to prove ICT spillovers among firms or industries within a country. However, to our knowledge, studies on international ICT spillovers are rare. Therefore, our main research question is whether foreign ICT investments, just like R&D expenditures, will have spillover effects on domestic productivity growth.

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Associate Editors
Table of Contents
M. Gordon Hunter, Felix B. Tan
M. Gordon Hunter, Felix B. Tan
Chapter 1
Alexander Y. Yap
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A Composite Model for E-Commerce Diffusion: Revisited
Chapter 2
Robert M. Davison, Yuan Li, Carol S.P. Kam
In the last few years, Web-based surveys have received increased attention given their potential to cut the costs and time associated with... Sample PDF
Web-Based Data Collection in China
Chapter 3
Jaymeen R. Shah
Privacy laws for the Internet are difficult to develop and implement domestically and internationally. A clear problem is how such laws are limited... Sample PDF
Privacy Protection Overseas as Perceived by USA-Based IT Professionals
Chapter 4
Hongxin Zhao, Seung Kim, Taewon Suh, Jianjun Du
This study attempts to examine empirically how social institutional factors relate to Internet diffusion in 39 countries. Based on nine-year... Sample PDF
Social Institutional Explanations of Global Internet Diffusion: A Cross-Country Analysis
Chapter 5
Somya Joshi, Michael Barrett, Geoff Walsham, Sam Cappleman
This article investigates how, and with what success, global organisations design computer-based systems for knowledge sharing which aim to balance... Sample PDF
Balancing Local Knowledge Within Global Organisations Through Computer-Based Systems: An Activity Theory Approach
Chapter 6
Kevin K.W. Ho, Byungjoon Yoo, Seunghee Yu, Kar Yan Tam
While previous studies on buy-it-now (BIN) auctions focus on the impact of BIN format on economic performances, our study focuses on factors that... Sample PDF
The Effect of Culture and Product Categories on the Level of Use of Buy-It-Now (BIN) Auctions by Sellers
Chapter 7
Shirish C. Srivastava, Thompson S.H. Teo
Though policy makers and governments are interested in understanding the returns from e-Government implementation, there are relatively few... Sample PDF
A Framework for Understanding Returns from E-Government
Chapter 8
Juan Juan Zhang, Sang-Yong Tom Lee
This article studies the role of international spillover of information and communication technology (ICT) in economic growth. We examine the... Sample PDF
A Time Series Analysis of International ICT Spillover
Chapter 9
William Wresch, Simon Fraser
Studies summarized by the United Nations Commission on Trade and Development continue to show that Small and Medium Enterprises (SMEs) in developing... Sample PDF
Technological Hurdles to Caribbean E-Commerce: Responses by Innovative Managers
Chapter 10
Robert M. Davidson, Carol S.P. Kim, Maggie Y. Li, Yuan Li, Carol X.J. Ou
In the last few years, Web-based surveys have received increased attention given their potential to cut the costs and time associated with... Sample PDF
Web-Based Surveys in China
Chapter 11
David Gefen, Tsipi Heart
Deliberate exploitation of natural resources and excessive use of environmentally abhorrent materials have resulted in environmental disruptions... Sample PDF
On the Need to Include National Culture as a Central Issue in E-Commerce Trust Beliefs
Chapter 12
Steven Hornik
The horizontal and vertical dimensions of individualism and collectivism are an important characteristic of cultures. These dimensions have many... Sample PDF
Culture's Impact on Technology Mediated Learning: The Role of Horizontal and Vertical Individualism and Collectivism
Chapter 13
Tamara Dinev, Massimo Bellotto, Paul Hart, Vincenzo Russo, Ilaria Serra, Christian Colautti
The study examines differences in individual’s privacy concerns and beliefs about government surveillance in Italy and the United States. By... Sample PDF
Internet Users' Privacy Concerns and Beliefs About Government Surveillance: An Exploratory Study of Differences Between Italy and the United States
Chapter 14
Shaobo Ji, Qingfei Min, Weihe Han
The purpose of this study is to review current research activities concerning information systems (IS) in mainland China. We thus examined Chinese... Sample PDF
Information Systems Research in China: An Empirical Study
Chapter 15
John Lim
Two seemingly disparate phenomena, advancement in computing technologies and rise in complexity of business negotiations owing to globalization... Sample PDF
A Study in the East Asian Context on Computer Support of Pre-Negotiation and Negotiation Stages
Chapter 16
Sang-Woo Lee, Myeong-Cheol Park, Dan J. Kim
This study relies on a customer demand-based view to examine how mobile number portability affects competition in the Korean mobile... Sample PDF
Mobile Number Portability in an Asymmetric Telecommunications Market: Korea Case
Chapter 17
Hazel Taylor
As outsourced and multinational IT projects become more common, managing risks for these projects is increasingly important. The research reported... Sample PDF
Vendor vs. Client Risks in Outsourced IT Projects: An Agency Theory Perspective
Chapter 18
Susan K. Lippert, John A. Volkmar
Research to date on information technology (IT) adoption has focused primarily on homogeneous single country samples. This study integrates the... Sample PDF
Cultural Effects on Technology Performance and Utilization: A Comparison of U.S. and Canadian Users
Chapter 19
Thompson S.H. Teo
The Internet can be used for different purposes ranging from simple Internet presence to using the Internet for business transformation. This study... Sample PDF
Basic vs. Advanced Modes of Internet Adoption: A Singapore Perspective
Chapter 20
Clive Sanford, Anol Bhattacherjee
This article presents an interpretive analysis of the key problems and challenges to technology implementation in developing countries, based on a... Sample PDF
IT Implementation in a Developing Country Municipality: A Sociocognitive Analysis
Chapter 21
Susan A. Sherer
This article investigates IT investment management processes in the U.S. and Portugal. In Portugal compared to the United States, we find less... Sample PDF
Comparative Study of IT Investment Management Processes in U.S. and Portugal
Chapter 22
Ruey-Lin Hsiao
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Misaligned Market: The Importance of Industry Context in Technology-Mediated Exchanges
Chapter 23
Syaiful Ali, Peter Green
Information technology plays a significant role enabling organisations to achieve their objectives. Accordingly, the governance mechanisms over the... Sample PDF
IT Governance Mechanisms in Public Sector Organisations: An Australian Context
Chapter 24
Shirley Chan
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Mobile Phone Communication Innovation in Multiple Time and Space Zones: The Case of Hong Kong Culture
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