KTH/CESIS Working Paper Series in Economics and Institutions of Innovation
Nabaz T. Khayyat
How ICT Investment and Energy Use Influence the Productivity of Korean Industries?
(), Jongsu Lee
() and Almas Heshmati
Abstract: This empirical study examines changes in industrial
productivity in Korea between 1980 and 2009, focusing on how investment in
information and communication technology (ICT) and energy use, influence
productivity levels. A dynamic factor demand model is applied in order to
link inter-temporal production decisions by explicitly recognizing that the
level of certain factors of production cannot be changed without incurring
so-called adjustment costs, defined in terms of forgone output from current
production. In particular, we investigate how the ICT–energy relationship
affects total factor productivity growth in 30 industrial sectors.
Describing industry-specific productivity levels is important for
policymakers when the allocation of public investment and support is
limited. The results presented herein show that ICT/non-ICT capital
investment are substitutes for labor and energy use. We also find a high
output growth rate in the sampled sectors, and increasing returns to scale,
whose effects on the TFP component are higher than those of technological
Keywords: Dynamic factor demand; Panel data; ICT investment; Energy use; Productivity; (follow links to similar papers)
JEL-Codes: C32; C33; Q41; (follow links to similar papers)
35 pages, April 16, 2014
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