Executive summary

The roll-out of information and communications technology (ICT) across the Australian and international economy has been apparent for many years. However, understanding the economic relationship between ICT and its impact has been difficult.

The Department of Communications, Information Technology and the Arts (DCITA) has published a number of reports dealing with the links between ICT, productivity and innovation. A primary motivation for these reports has been to alert policy-makers and the interested public to the central role that ICT now plays in innovation processes across the entire economy. Indeed, indications are that in the last two decades ICT has emerged as the main technological driver of productivity growth in Australia.

The impact of ICT is undoubtedly significant. However, developing an understanding of what has happened is difficult due to its pervasiveness and the many other concurrent changes in the economy. DCITA’s research uses various economic models to draw out a better understanding of the significance of ICT. The reports highlight the serious measurement and methodological difficulties involved in estimating the contribution of ICT to productivity growth.

The reports cover a range of material. Some attempt to quantify the contribution of ICT to productivity growth. In addition they look at other factors such as micro-economic reform, more capital per worker, higher level of schooling and progress in non-ICT related technologies.

The research suggests that investing in ICT has paid significant dividends to Australia and will continue to do so for some time yet. ICT ultimately provides users with greater gains than reflected in the market price, after adjusting for quality. Users cannot capture all of the benefits. Some positive spillovers (externalities) flow to other organisations and consumers from ICT use and from ICT related research and development (R&D). DCITA’s estimates and some overseas studies suggest that there are positive externalities associated with both ICT related R&D and ICT innovation activities that are not classified as R&D.

Some of the studies examine the commercial returns from ICT investment to firms and organisations and indicate appropriate management strategies to optimise these returns.

• Document ID: 68001 |
• Last modified: 5 February 2008, 9:01am