Estimating effects of information and communication technology (ICT) on the productivity of manufacturing industries in South Africa

Abstract

This paper serves to examine whether the growth in labour productivity (LP) in South Africa’s manufacturing sector, following policy reforms after 1994, can be attributed to ICT use. To achieve this, we examine the link between ICT intensity and LP growth of 23 manufacturing industries for the period 1970–2016 and sub-periods 1970–1995 and 1996–2016. The industries are disaggregated into two groups, which are ‘more ICT-intensive’ and ‘less ICT-intensive’, using the ICT intensity index. Four dummy variable regression models are applied to test for the relationship between ICT intensity of industries and LP growth. The findings suggest that LP of the more ICT-intensive industries accelerated more than that of their counterparts. The results underscore the need for policy measures to increase ICT use with the aim of improving LP performance of industries.