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Productivity drivers of the information economy

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The growth of the information economy is having far-reaching social and economic implications. To achieve national success in this new environment there will need to be an appreciation and understanding of the factors that drive innovation and growth in the information economy and are likely to underpin its future development.

There can be little doubt that information and communications technology (ICT) is the fundamental technology driving innovation in our society. DCITA runs an extensive research program and is actively contributing to the understanding of ICT’s impact on productivity.

Commonwealth context

The Australian Government recognises the important role that ICT plays in the innovation process and in achieving economic growth for Australia. As the information economy becomes embedded across the wider economy, the importance of ICT in the innovation process is becoming more evident.

In January 2001, the Government released the five-year, $3 billion Innovation Action Plan, Backing Australia's Ability, followed in 2004 by Building our Future through Science and Innovation - Backing Australia’s Ability, a new package totalling
$5.3 billion over seven years from 2004–05. Together the packages are a 10-year,
$8.3 billion funding commitment that will stretch from 2001–02 to 2010–11.

These packages have resulted in significant advances in Australia’s innovation and ICT environment. A number of initiatives focused on developing Australia’s ICT potential.

National ICT Australia (NICTA)cooperative research centres
the extension of the Information Technology Online program (ITOL)
the Commercialising Emerging Technologies (COMET) program
the Advanced Networks Program (ANP)
the ICT Incubators Program (formerly BITS Incubator Program)

That these initiatives were administered across a number of agencies and departments, such as AusIndustry, AusTrade, the Department of Industry, Tourism and Resources, the Department of Education, Science and Training, and the Department of Communications, Information Technology and the Arts, is indicative of a coordinated, whole-of-government commitment on the part of the Australian Government.

Strategic context

In 2004, the Government released Australia’s strategic framework for the information economy 2004–2006: opportunities and challenges for the information age. It provides the policy platform to address new challenges to Australia’s position as a leading information economy.

Two of the four priorities of the strategic framework are specific to the ICT–productivity debate:

develop Australia's innovation system as a platform for productivity growth and industry transformation; and
raise Australian public sector productivity, collaboration and accessibility through the effective use of information, knowledge and ICT.

More broadly, the Government, through its Backing Australia’s Ability policy, has indicated that innovation in general is a key driver of economic growth.

In light of these key priorities, DCITA has undertaken extensive research into the relationship between ICT and productivity growth, because the extent of ICT’s contribution to productivity growth has important policy implications.

The research concludes that ICT is making a very significant contribution to productivity growth and is radically improving our capacity to collect, analyse, utilise, distribute and exchange information.

In particular, the research has revealed that much of ICT’s contribution to economic and productivity growth has been understated by current economic methodologies and measurement techniques. Indeed, it is becoming clear that ICT is a general-purpose technology (GPT) and an enabler of other technologies, and has significant flow-on effects for the whole economy.

DCITA is continuing its extensive research program, so we invite you to check back regularly for the latest publication.

Specific research papers

Macro studies
DCITA has undertaken extensive macro research into the impact of ICT on Australian productivity growth. Recent studies have focused on exploring the impact of ICT on productivity growth in manufacturing and service industries.

Firm-level studies
DCITA has also undertaken extensive firm-level research, focusing on the benefits that could be gained by Australian businesses investing in ICT. These studies have identified significant productivity gains from optimising ICT spend and adopting electronic commerce. Further research is being conducted to assess firm-level strategies that underpin successful ICT implementation.

Document ID: 48585 |
Last modified: 5 February 2008, 4:57pm