The Impact of the Information and Communication Technology on Production and Total Factor Productivity of Industrial Firms

Subject Areas : Business Management

Yadollah  Rajaye ¹ (Faculty Member (Assistant Professor), Department of Economics, Abhar Branch, Islamic Azad University, Abhar, Iran)

Received: 2011-05-09 Accepted : 2012-03-08 Published : 2012-05-21

Keywords: Total factor productivity, Industry, Panel Data, information and communication technology, Growth accounting,

Abstract :

This article has investigated the effect of information and communication technology (ICT) on the production and total factor productivity by using the analysis of the panel data. To perform this, the analysis was done through the application of the statistical data received from the industrial firms related to Iran's StatisticsCenter using a panel data model to the firm level, based on the latest published information (2006-2007). The study has been conducted with two approaches. In the first one, the effects of information and communication technology on the production through estimating the expanded function of Cobb Douglas, regarding the largeness of the agency and the type of the industry have been noted. Six measuring characteristics related to the amount of implementing information and communication technology in Iranian Industry, within the scope of agencies, have been taken into account. In the second approach, the extended production function of Cobb Douglas has been estimated for the two groups of agencies. The groups included those which applied computers in doing the tasks and those which did not. Then, the amounts of the productivity of total production factors were compared. Accordingly, the effect of ICT on production in the first approach, and its effect on total factor productivity in the second one have been considered. The results indicate that most ICT characteristics confirm the positive effects of the information and communication technology on the productivity to the firm level. Also, the results of the second approach validate the undeniable impact of the so-called technologies on the total factor productivity.  

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