Estimating effects of ICT intensity on productivity, employment and output in South Africa : an industry-level analysis

Abstract

This article aims to estimate the effects of ICT intensity on labor productivity, employment and output of agro-processing industries. To achieve this, the ICT intensity index is applied to rank industries into ‘more ICT-intensive’ and ‘less ICT-intensive’ groups. Thereafter, the annual growth rates of labor productivity, employment and output were calculated. Ultimately, the effects of ICT intensity were examined using Pooled Mean Group estimation, the Toda and Yamamoto Granger Non-Causality Test, and the Impulse Response Function and Variance Decomposition analyses. The findings suggest that ICT intensity yields higher positive and significant effects on the growth of the more ICT-intensive industries. Evidence of a causal relationship was detected for the more ICT-intensive industries. The findings further proved that ICT intensity contributed more to the forecast error variance in the growth of the more ICT-intensive industries. Overall, this article provides evidence of ICT-led growth for industries that use ICT most intensively.