Issue 1: April - June 2000

 

UNU Study Links Information Technology
Investment, National Economic Growth

Countries that invest heavily in information technology reap handsome rewards in economic growth and higher living standards, according to a study by the World Institute for Development Economics Research of the UN University in Helsinki (UNU/WIDER).

The WIDER study focuses on three countries that have invested heavily in IT over the past two decades -- Finland, Singapore and South Korea -- and compared them with the United States. It found that computers have accounted for the greatest share of GDP growth in South Korea (32 per cent) followed by Singapore (19 per cent), Finland (16 per cent) and the United States (8 per cent).

WIDER's comparison of a larger sample of 23 OECD countries reinforced the correlation between investment in computers and economic growth. In fact, the effect of IT investment has been almost as great as that of all other fixed investment combined.

"Investment in infrastructure, physical capital and education is still the key to economic development," said UNU/WIDER chief academic officer Dr. Matti Pohjola, author of the study, Information Technology and Economic Development. "What this study adds is the view that the information technology (IT) content of these investments should be high."

He adds: "There has been no corresponding growth effect in our sample of developing countries. It would seem that developing countries have not yet invested sufficiently in physical infrastructure and human capital to make IT investment worthwhile. This technology does not yet seem offer the developing countries a shortcut to prosperity."

UNU presented a policy panel on the theme of the high-level segment of ECOSOC 2000, "Development and international cooperation in the XXI century: the role of information technology in the context of a knowledge-based economy". A report from the session, which was called Information Technology, Economic Growth and Development, will be posted on the WIDER website soon.

For more information:
Mr. Ara Kazandjian
UNU/WIDER
Helsinki Finland


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