The Substitution & Pervasiveness Effects of ICT on China’s Economic Growth
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| Title | The Substitution & Pervasiveness Effects of ICT on China’s Economic Growth
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| Author | Cai Yuezhou and Zhang Junnan |
| Organization | Chinese Academy of Social Sciences,CASS |
| Email | caiyuezhou@cass.org.cn；caiyuezhou88@sina.com |
| Key Words | Information and Communication Technology (ICT), General Purpose Technology (GPT), Substitution Effect, Pervasiveness Effect, Growth Accounting, |
| Abstract | The information and communication technology (ICT) has both a substitution effect and pervasiveness effect on economic growth. The technological progress brings the continuous price fall of ICT products, which in turn results in the substitution of ICT capital for non-ICT capital. Meanwhile, as a general purpose technology (GPT), ICT has the character of pervasiveness, and are applied in almost all the other sectors, which would bring the improvement of TFP and economic growth. Within the framework of growth accounting formed by Jorgensen and OECD, the economic growth of China during the period 1977-2012 is divided into different sources. The substitution and pervasiveness effects of ICT are further analyzed based on the measurement results. It is indicated that: (1) the contribution of ICT capital can be attributed as the substitution effect of ICT, which is only 3.4% on average. However, the contribution is significantly improved since 1990, and reaches a level of 9.83% during 2010-2012, almost that of TFP. (2) the pervasiveness effect of ICT would is confirmed with Granger Causality Test. China is entering a state of “New Normal”. To keep a moderate high growth rate while transforming the economic growth pattern, we should get rid of the dependence on investment. And ICT would be an important support for China’s future growth. |
| Serial Number | WP932 |
| Time | 2015-10-23 |
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