ICT contribution to economic performance in Belgium: preliminary evidence -revision of WP 7-02 [ Working Paper 08-02 - 08/10/2002]

The macroeconomic results presented here - as summarised in Table 2 - are based on ICT investment expenditure data that are compatible with the data of the 1995 input-output. As the level of the revised ICT investment expenditure is larger than the ICT investment expenditure used in WP 7-02, the results of the growth accounting exercise point to a somewhat larger contribution of ICT Capital accumulation to growth.

In this paper, the impact of ict on economic and productivity growth is investigated in the context of the Belgian economy. The analysis is conducted at aggregate and branch level. The impact of ict on economic growth through productivity gains can be transmitted via three different channels, namely the increase in the ict capital available per worker (capital deepening), technical progress in ict producer sectors (tfp growth) and finally, technical progress in ict user sectors through spillover effects (tfp growth).

At a macroeconomic level, the empirical evidence indicates that ict accounts for more than half of the acceleration in productivity growth in the United States. In Europe, the impact seems to be weaker, due both to a less developed ict producer sector and to a slower diffusion of ict in the economy. The conclusions for Europe also apply to Belgium. Nevertheless, the average annual growth contribution of ict capital accelerated between the first and second half of the 1990s, from 0.31% to 0.55%. This development puts Belgium slightly above the average for the European Union.

At the sectoral level, the analysis seeks to establish links between the evolution of productivity and the diffusion of ict in the various economic sectors. This analysis leads to further investigation of the apparent trade-off between productivity and employment that can be seen in Belgium and the role of ict investment. Several sectors appear to have carried out important ict investment as early as 1995. Sharp productivity growth is observed for all these branches but in terms of job creation, performance has been more heterogeneous.

A detailed study of the Belgian sectors leads to the same conclusion as for other countries: ict producer sectors account for the majority of the overall increase in productivity and they are also job creators. The behaviour of the sectors that use ict intensively is not so clear-cut. Some service sectors that use ict intensively have recorded both productivity and employment growth while the manufacturing industries have recorded an increase in productivity and a sharp decline in employment. In the first case, spillover effects of ict on tfp may prevail while in the second case capital deepening may be the dominant effect.