ICT Adoption and Productivity in Developing Countries: New Firm Level Evidence from Brazil and India

48 Pages Posted: 22 Sep 2006

See all articles by Rakesh Basant

Rakesh Basant

Indian Institute of Management, Ahmedabad

Simon John Commander

London Business School; IZA Institute of Labor Economics

Rupert Harrison

Institute for Fiscal Studies (IFS)

Naercio Menezes-Filho

Universidade de Sao Paolo - Department of Economics; Institute for Fiscal Studies (IFS)

Date Written: September 2006

Abstract

This paper uses a unique new data set on nearly a thousand manufacturing firms in Brazil and India to investigate the determinants of ICT adoption and its impact on performance in both countries. The descriptive evidence shows that Brazilian firms on average use ICT more intensively than their Indian counterparts but changes over time have been rather similar in both places. Within countries ICT intensity is strongly related to size, ownership structure, share of administrative workers and education. The econometric evidence documents a strong relationship between ICT capital and productivity in both countries, even after controlling for several other factors, including firm-specific fixed-effects. The rate of return of ICT investment seems to be much larger than usually found in more developed countries. Specific types of organisational changes matter for the return of ICT, but only for high adopters. Firms report several constraints to ICT investment in both countries and power disruption seems to significantly depress adoption and returns to ICT expenditures in India. This may be indicative of the impact of a cluster of poor institutions and/or infrastructure on performance.

Keywords: ICT, productivity

JEL Classification: J2, E20, L20, L60, O33

Suggested Citation

Basant, Rakesh and Commander, Simon John and Harrison, Rupert and Menezes-Filho, Naercio, ICT Adoption and Productivity in Developing Countries: New Firm Level Evidence from Brazil and India (September 2006). IZA Discussion Paper No. 2294. Available at SSRN: https://ssrn.com/abstract=932029

Rakesh Basant

Indian Institute of Management, Ahmedabad ( email )

Vastrapur
Ahmedabad 380015, Gujarat
India

Simon John Commander (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Rupert Harrison

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Naercio Menezes-Filho

Universidade de Sao Paolo - Department of Economics ( email )

Sao Paolo, 05508-010
Brazil

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
518
Abstract Views
2,140
rank
52,263
PlumX Metrics