ICT: A Key Driver of Economic Growth & Research Development - Research Paper

Introduction

Information and communication technology (ICT) refer to manufactured services and products that are made to enhance the flow of information, its processing and the use of electronic methods to identify, review, and understand physical processes (Barfield & Heiduk, 2003). The speed of growth of any economy depends on its ability to ensure information is efficiently handled among the stakeholders in a government. ICT is also a key driver of development in research, which is a crucial player in ensuring there are advancements in the activities that a country is affiliated to.

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Depending on the investments that a country has out on improvement of ICT, the level of growth may vary. This is because the ICT world is dynamic and often changes to the preferences that individuals focus on in their day-to-day activities (Cimoli & Correa, n.d). ICT is critical for industries that intend to change the types of production while they optimize the usage of resources to ensure efficient growth that is within their capability (Eriksen, 2013). ICT also encourages market research, which holds a central position in improving the factors of input and dissemination of company products in a diverse environment with facets such as price and capital, which are often linked (Detshew, 2008). This factor encompasses all types of industries, and activities such as the distribution of labor and market research are indeed a vital consideration in reviewing areas of economic growth in any country.

The analysis of the econometric relationship between ICT and Italy is a critical process that enhances the understanding of incites that have led to the growth of the nation between 1970 and 2017 (Foxon, n.d). Reviewing the role of ICT in economic growth is, however, a hard task since it is complicated by the diverse nature of both fields. Both the economy and the ICT industry in Italy are ever-changing and often need a very close analysis of the variations that emerge in each year, that is, from 1970 to 2017. Furthermore, insufficient information regarding the investment process and the distribution of capital in Italy possess a problem with this analysis (Kheng Soon, 2012). Such economic and industrial statistics are critical to the derivation of viable results regarding the association between ICT and economic growth in Italy (Kpodar & Andrianaivo, 2011). Nevertheless, there has been an increase in the amount of research that reviews the econometric association between economic growth and ICT in Italy.

These research studies concentrate on the assessment of the variations in the effect of the growth of the ICT industry while considering the growth of output in Italy. Furthermore, some of the reviews have focused on the behavior of the economy in Italy regarding the changes in the ICT industry (Bisello, Vettorato, Stephen & Elsei, 2017). The primary motivation for these studies comes from growth in the ICT sector from a global context which has had an impact in the way that technological change is perceived in various regions of the world (Ngoma, 2010). Embracing such changes and ensuring new forms of improvement are integrated into economic growth facets has enabled for better management of risks while providing investments give the best results.

The role of economic growth can be reviewed from three primary contexts. The first context is to examine the increasing weight of the ICT businesses in the economy, the second is to explore the ICT industry as a unique capital input in a nation, and the last to review the spillovers that arise from the usage of ICT processes and their benefits to critical players in the economy such as investors and owners (Niebel, 2014). All of these angles are critical to the deciphering of the specific role that ICT growth has had on the economy of Italy in the last 20 years (Stanley, Doucoulligous, & Steel, 2018). The direct contribution of the use of ICT and its effects of the growth of output can be used to find the indirect link that exists between the impact in the changes in technology and productivity in the economy. Further analysis would review the role of productivity in the improvement of relative technological prowess in each unit of production in an economy.

It has been found Italy's economy has grown by over 0.2% in the first quarter of the 2019-2020 fiscal year (Politico, 2019). This is an indication of the country's exit of its third recession in the last decade. This is an essential aspect of the relation between economic growth between ICT and economic growth in the nation since it presents a real-life review of events that have led to the development of the country's GDP (Welfen, 2008). The National Office of Statistics in Italy reported that domestic demand was a drag to the growth (OECD, 2019). Furthermore, it elucidated that the net export was a boost for the growth in the country. However, it was worth noting that the expansion of this economy in the Eurozone was much lower than that of other countries in the area.

This paper is aimed at reviewing the econometric connection between economic growth and the ICT industry in Italy between 1970 and 2017. This study will cover a range of survey data that is presented from different sectors in Italy's economy. A non-parametric method will be used to review the technique in which technical efficiency in the country has improved the growth of the economy in the last 20 years. The econometric regressions between the different industries in Italy and economic growth will be used to define and approximate the association between the two fields. The statistics used in this study is acquired from the OECD STAN database that will include industries such as manufacturing and mining service providers in Italy.

Literature Review

The main effects that ICT has on economic growth in Italy have been reviewed by several studies around the world. These studies have evaluated the ICT industry as a facet for production that is special and has its traits that are linked to the way that the economy responds to technological changes (OECD, 2004). A study by Oliner and Sichel (2000) found the evidence that economic growth is linked to small changes in the ICT industry in Italy. This empirical evidence described by Oliner and Sichel (2000) has had a substantial influence on the way other countries review economic growth. These results are consistent with those found by Oulton (2001), who examined the same relationship for the same variables in the United Kingdom. This means that different economies in the world have their response to changes in technology, but the ICT industry has a constructive impact in the way that the economy grows regardless of the factors that drive economic growth in each country.

Across in the ICT industry, a wide range of effects in economic growth have been observed in Italy and other countries in the same region. Stiroh (2001) found that industry growth in the United States is directly linked with the input that the government assigns to management and improvement of ICT aspects in the nation. However, there still exists an uncertain range of results that are obtained on the econometric relationship between the economy and the ICT industry (Colchia & Schreyer, 2001). The scarce presence of any viable data to back relevant results that give proper inference in the way that Italy is affected by the industry makes the comparison of these variable a complicated task for researchers around the world (Malgarini & Piga, 2006). Furthermore, differences in critical drivers for each economy in the world make this comparison harder since it requires the standardization of data and variables to produce relevant and accurate results.

Daveri (2001), using data from previous research that review economic growth using information from the World Information Technology and Services Alliance (WTSA), found that growth in any economy in Europe, especially Italy, in the 1990s was accounted for by the fast increase in the use of ICT resources to improve the use of resources (Bilgin, Danis, Demis, & Can, 2017). For countries such as Ireland and Sweden, about two-thirds of the growth in the economy were accounted for by the rapid intensification in the use of information technology in industries. This study also found that between 25% and 90% of the variation between the countries in the European Union and the United States is accounted for by the differences in the accumulation of usage of ICT resources in each region (Matais, Nijakamp, & Sarmento, 2013). Countries such as Germany and France were found to have moderate growth in the ICT industry, hence less growth in their economy.

The effect that the ICT industry has on change in technologies and productivity in each economy varies. Specifically In Italy, this phenomenon is driven by having different preferences in imports and exports (David, Thoamas, & British Academy, 2006). The role of the ICT industry in inducing growth in productivity is linked to its applicability in improving the flow of processes in any industry. Its ability to articulate different resources in a company's environment to ensure efficient growth in the quality of activities is a critical consideration for any research that aims to study the association between economic growth and the ICT industry (Yusuf, Nabeshima, & Yamashta, 2008). Therefore, the analysis of the role of capital inputs in improving the ICT industry creates a viable insight into how technological change is perceived from an economic point of view in Italy. Hulten (2001) suggest that accounting for growth in an economy can be done using econometric techniques that elucidate the residual productivity component that helps reduce any overlooking that may be done to some variables that are critical to the understanding of the relationship between the variables in the subject.

Caselli & Coleman II (2000) found that low-income countries are more expected to grow their economies by implementing ICT resources that are already in use in higher ranked nations. Italy is dived into two main economies. The North being more developed and industrialized and the south having less developed prospects. The analysis of imports of computers in both these economies in Italy done in this study also found that the adoption of ICT resources such as computers was linked to high levels of human capital, investments, and rights protection that often led to trade awareness in the nations (D'Afri, Casalino & Macro, 2008). The interaction between these two divisions creates clear insight in how Italy's economy has grown between 1970 and 2017. The finding of an econometric relationship between the ICT and economic growth in Italy was a clear indication of the role that the ICT industry does in improving global trade today. When countries are involved in global business that is linked to ICT resources, there is an improved flow of ICT equipment in all the economies involved which ensures that each country is well endowed with critical drivers of development in technological aspects.

Paganetto, Becchetti & Londono Bedoya (2003) reviewed the factors that determine investments in the ICT industry and their effect in efficiency and productivity regarding medium and small-sized companies in Italy. This study applied sectoral frameworks used by stakeholders in the production process to calculate the variation that exists between each kind of firm. It was found that investing in software and implementing ICT resources in the managing of business needs increased the demand for skilled workers and the productivity of labor in each kind of firm. On the other hand, Ferri, Galeotti & Ottavio Ricchi (2005) analyzed 450 small and medium-sized business in Italy and c...