nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2020‒06‒29
eleven papers chosen by
Marek Giebel
Universität Dortmund

  1. At The Roots Of The Fourth Industrial Revolution: How ICT Investments Affect Industry 4.0 Adoption By Marco Bettiol; Mauro Capestro; Eleonora Di Maria; Stefano Micelli
  2. Concentration and Agglomeration of IT Innovation and Entrepreneurship: Evidence from Patenting By Chris Forman; Avi Goldfarb
  3. Information, Technology Adoption and Productivity: The Role of Mobile Phones in Agriculture By Apoorv Gupta; Jacopo Ponticelli; Andrea Tesei
  4. The Effects of Mobile Phone Technology, Knowledge Creation and Diffusion on Inclusive Human Development in Sub-Saharan Africa By Simplice A. Asongu
  5. Capital Dynamics, Global Value Chains, Competitiveness and Barriers to FDI and Capital Accumulation in the EU By Amat Adarov; Robert Stehrer
  6. A Survey of Fintech Research and Policy Discussion By Franklin Allen; Xian Gu; Julapa Jagtiani
  7. Online Consumption During the COVID-19 Crisis: Evidence from Japan By Tsutomu Watanabe; Yuki Omori
  8. Innovation, Growth and Structural Change in American Agriculture By Julian M. Alston; Philip G. Pardey
  9. Job Skill Requirements: Levels and Trends By Handel, Michael J.
  10. Linkages and spillover effects of South African foreign direct investment in Botswana and Kenya By Nandonde, Felix; Adu-Gyamfi, Richard; Mmusi, Tinaye; Wamalwa, Herbert; Asongu, Simplice; Opperman, Johannes; Makindara, Jeremiah
  11. The benefits of remoteness: Digital mobility data, regional road infrastructure, and COVID-19 infections By Krenz, Astrid; Strulik, Holger

  1. By: Marco Bettiol (DSEA - University of Padova); Mauro Capestro (DSEA - University of Padova); Eleonora Di Maria (DSEA - University of Padova); Stefano Micelli (Department of Management - Ca’ Foscari University)
    Abstract: The debate on the adoption of industry 4.0 technologies focuses on the transformation of organizations and business opportunities towards a new industrial revolution, driven by a recent emerging technological scenario. Despite this growing discussion, little has been said on the relationship with the previous waves of digital technologies and specifically how Information and Communication Technologies (ICT) are related with the adoption of industry 4.0 technologies. The paper explores the relationship between the antecedents driving industry 4.0 investments, examining how the firm’s ICT endowment relates to the industry 4.0 technologies adopted, in terms of intensity as well as of types of ICT associated with specific types of industry 4.0 technologies, and the role of strategic motivations on the investment 4.0. Based on unique data gathered in 2017 on a sample of 1,229 Italian firms, results on 165 adopters show the positive relation between the adoption of ICT and industry 4.0 technologies as well as between specific groups of ICT technologies – that we identify into three ones: web ICT, management ICT, and manufacturing ICT – and groups of industry 4.0 ones (data-driven tech 4.0, production tech 4.0, and customization tech 4.0). Results highlight the strong connection between firm experience with prior digital investments and the consequent Industry 4.0 adoption. Moreover, there is a relation between specific clusters of ICT technologies – Web ICT, Operation ICT, and Management ICT – and industry 4.0 technologies. Among the strategic motivations driving industry 4.0 the relevant one is product variety, consistently with the selective technologies chosen, taking into account the ICT path of adoption. On the contrary efficiency is negatively related to the adoption of industry 4.0 technologies, stressing the more important role of market-driven variables for technological investments. A second relevant result is related to the role of ICT-related competences firms have to internally develop in order to adopt industry 4.0 technologies, beyond size. For firms – also SMEs – it becomes more important in the context of “Industry 4.0†to rely on internal resources (know-how connected to the ICT domain) that can positively enact the selection and exploitation of industry 4.0 technologies. As a policy implication, pushing the adoption of industry 4.0 technologies in firms with limited ICT resources should be coupled with actions supporting the development of such know-how and broader ICT competences as the roots for industry 4.0.
    Keywords: digital technologies, ICT, strategy, industry 4.0, fourth industrial revolution
    Date: 2020–06
  2. By: Chris Forman; Avi Goldfarb
    Abstract: Information technology (IT) matters to prosperity. The top patenters are increasingly IT companies. We use data on US patents to document four trends in IT patenting. First, firm-level concentration in IT patenting is increasing over time. Second, geographic concentration in IT patenting is increasing over time. Third, most technology classes experienced a decline in new patenters from 1980 to 2000. This was not true of new IT patents. Since 2000, the trend in new IT patenters looks like other classes and is declining over time. Fourth, there is increased geographic concentration of new IT patenters. We do not identify the reasons behind these trends nor whether they are related to overall changes in industry concentration, agglomeration, or prosperity.
    JEL: L22 L26 M13 M15 O31 O32 O33 O34 R12
    Date: 2020–06
  3. By: Apoorv Gupta; Jacopo Ponticelli; Andrea Tesei
    Abstract: We study the effect of information on technology adoption and productivity in agriculture. Our empirical strategy exploits the expansion of the mobile phone network in previously uncovered areas of rural India coupled with the availability of call centers for agricultural advice. We measure information on agricultural practices by analyzing the content of 2.5 million phone calls made by farmers to one of India's leading call centers for agricultural advice. We find that areas receiving coverage from new towers and with no language barriers between farmers and advisers answering their calls experience higher adoption of high yielding varieties of seeds and other complementary inputs, as well as higher increase in agricultural productivity. Our estimates indicate that information frictions can explain around 25 percent of the agricultural productivity gap between the most productive and the least productive areas in our sample.
    JEL: O33 O4 Q16 Q55
    Date: 2020–05
  4. By: Simplice A. Asongu (Yaounde, Cameroon)
    Abstract: This paper examines the joint effects of mobile phone technology, knowledge creation and diffusion on inclusive human development in 49 sub-Saharan African (SSA) countries. The empirical evidence is based on Tobit regressions for the period 2000-2012. The net effects of interactions between the mobile phone, knowledge creation and diffusion variables are positive indicating that the combined effects of these variables improve inclusive human development in SSA countries. Further analysis dividing the dataset into a number of fundamental characteristics based on economic, legal, religion and political stability associated with African economies show that mobile phone penetration and associated innovation in SSA improve inclusive human development irrespective of the country’s level of income, legal origins, religious orientation and the state of the nation. The pupil-teacher ratio exerts a negative influence on the outcome variable which is favourable for inclusive human development because higher ratios denote lower education quality since more pupils are accommodated by fewer teachers. The study contributes to innovation diffusion theory and economic development literature.
    Keywords: Mobile phones; Innovation, Knowledge diffusion; Inclusive human development; Africa
    JEL: G20 I10 I32 O40 O55
    Date: 2020–01
  5. By: Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The study analyses the relationships between capital dynamics, productivity, global value chains and foreign direct investment using panel data techniques. Among other results, we confirm the high importance of tangible and intangible ICT capital for productivity and GVC integration. We examine the extent of underinvestment in ICT in the EU relative to other major economies and identify bottlenecks for efficient capital allocation. The sluggish economic performance of the EU in the post-crisis period has been further challenged by the COVID-19 outbreak. Consolidating policy efforts to facilitate ICT investment, tackling the barriers to ICT adoption and broad-based digitalisation are critical for the EU in order to maintain a competitive edge and unlock new growth opportunities in the new normal.
    Keywords: Productivity, digitalisation, ICT capital, FDI, global value chains, barriers to ICT investments, intangible capital
    JEL: F14 F15 F21 E22 O47
    Date: 2020–06
  6. By: Franklin Allen; Xian Gu; Julapa Jagtiani
    Abstract: The intersection of finance and technology, known as fintech, has resulted in the dramatic growth of innovations and has changed the entire financial landscape. While fintech has a critical role to play in democratizing credit access to the unbanked and thin-file consumers around the globe, those consumers who are currently well served also turn to fintech for faster services and greater transparency. Fintech, particularly the blockchain, has the potential to be disruptive to financial systems and intermediation. Our aim in this paper is to provide a comprehensive fintech literature survey with relevant research studies and policy discussion around the various aspects of fintech. The topics include marketplace and peer-to-peer lending, credit scoring, alternative data, distributed ledger technologies, blockchain, smart contracts, cryptocurrencies and initial coin offerings, central bank digital currency, robo-advising, quantitative investment and trading strategies, cybersecurity, identity theft, cloud computing, use of big data and artificial intelligence and machine learning, identity and fraud detection, anti-money laundering, Know Your Customers, natural language processing, regtech, insuretech, sandboxes, and fintech regulations.
    Keywords: fintech; marketplace lending; P2P; alternative data; DLT; blockchain; robo advisor; regtech; insuretech; cryptocurrencies; ICOs; CBDC; cloud computing; AML; KYC; NLP; fintech regulations
    JEL: G21 G28 G18 L21
    Date: 2020–05–28
  7. By: Tsutomu Watanabe (Graduate School of Economics, University of Tokyo); Yuki Omori (Nowcast Inc.; M.A. candidate, Graduate School of Information Science and Technology, University of Tokyo)
    Abstract: The spread of novel coronavirus (COVID-19) infections has led to substantial changes in consumption patterns. While demand for services that involve face-to-face contact has decreased sharply, online consumption of goods and services, such as through e-commerce, is increasing. The aim of this study is to investigate whether online consumption will continue to increase even after COVID-19 subsides, using credit card transaction data. Online consumption requires upfront costs, which have been regarded as one of the factors inhibiting the diffusion of online consumption. However, if many consumers made such upfront investments due to the coronavirus pandemic, they would have no reason to return to offline consumption after the pandemic has ended, and high levels of online consumption should continue. Our main findings are as follows. First, the main group responsible for the increase in online consumption are consumers who were already familiar with online consumption before the pandemic and purchased goods and service both online and offline. These consumers increased the share of online spending in their spending overall and/or stopped offline consumption completely and switched to online consumption only. Second, some consumers that had never used the internet for purchases before started to use the internet for their consumption activities due to COVID-19. However, the share of consumers making this switch was not very different from the trend before the crisis. Third, by age group, the switch to online consumption was more pronounced among youngsters than seniors. These findings suggest that it is not the case that during the pandemic a large number of consumers made the upfront investment necessary to switch to online consumption, so a certain portion of the increase in online consumption is likely to fall away again as COVID-19 subsides.
    Date: 2020–05
  8. By: Julian M. Alston; Philip G. Pardey
    Abstract: U.S. agriculture was transformed during the 20th century by waves of innovation with mechanical, biological, chemical, and information technologies. Compared with a few decades ago, today’s agriculture is much less labor intensive and farms are much larger and more specialized, supplying a much-evolved market for farm products. Over recent decades, the global landscape for agricultural R&D has shifted away from farms, away from the public sector toward the private sector, and away from the United States towards agriculturally important middle-income countries, especially China, India and Brazil. U.S. investments in agricultural R&D are stalling even though meta-evidence shows that past U.S. investments in agricultural R&D have yielded very favorable returns: median reported benefit-cost ratios in the range of 12:1. Sustained U.S. investment and innovation will be required to preserve past productivity gains in the face of climate change, coevolving pests and diseases, and changing technological regulations—let alone increase productivity. Great potential exists for innovation in crop and livestock genetics and digital farming technologies to generate new products and production processes, but innovators are facing increasingly strong headwinds from social and political forces that seek to dictate technology choices.
    JEL: O13 O3 O4 O51 Q16 Q28 Q52
    Date: 2020–05
  9. By: Handel, Michael J.
    Abstract: This background paper for MIT’s Work of the Future report (2020) reviews what is known about trends in job skill requirements. The paper reviews issues related to the conceptualization and measurement of job skill requirements and the state of existing data before discussing recent rich cross-sectional data and more variable trend data for both the United States and other OECD countries. In general, the data on current levels of skill demand are at variance with the more extreme views that emphasize the prevalence of high-tech jobs or other kinds of “knowledge work.” Trends are consistently gradual on their face and often flatter in the previous ten to twenty years relative to previous decades—there is no consistent evidence that trends have accelerated markedly since 1980, and the dominant impression is continuity rather than discontinuity. Information technology changes very rapidly, but work roles and the occupational structure change gradually and will likely to continue to do so in the future. The data on current levels of job skill demands and recent trends help provide a frame of reference for evaluating predictions regarding future changes in job skill requirements.
    Keywords: skills; tasks; occupations; labor markets
    JEL: J21 J23 J24
    Date: 2020–02–01
  10. By: Nandonde, Felix; Adu-Gyamfi, Richard; Mmusi, Tinaye; Wamalwa, Herbert; Asongu, Simplice; Opperman, Johannes; Makindara, Jeremiah
    Abstract: In recent decades, the impact of South African foreign direct investment in Africa has been captured by research and policy. This paper investigates linkages and spillover effects of South African foreign direct investment in Botswana and Kenya. The study uses primary data to investigate qualitative implications. The findings reveal that South African firms operate in sectors including retail, food-processing, and information and communication technology. Linkages forged in these sectors include supply, employee, joint venture, service, and institutional nexuses. Supply and service linkages create observable spillovers which point to the fact that younger local firms tend to benefit from South African firms in terms of technology transfer and training opportunities. Host country policymakers are therefore encouraged to provide favourable incentives for foreign direct investment to promote entrepreneurship. Other policy implications are also discussed.
    Keywords: Foreign direct investment, linkages, spillover effects, South Africa, Botswana, Kenya
    JEL: E23 F21 F30 L96 L98 O55
    Date: 2019–03
  11. By: Krenz, Astrid; Strulik, Holger
    Abstract: We investigate the regional distribution of the COVID-19 outbreak in Germany. We use a novel digital mobility dataset, that traces the undertaken trips on Easter Sunday 2020 and instrument them with regional accessibility as measured by the regional road infrastructure of Germany's 401 NUTS III regions. We identify a robust negative association between the number of infected cases per capita and accessibility by road infrastructure, measured by the average travel time to the next major urban center. What has been a hinderance for economic performance in good economic times, appears to be a benevolent factor in the COVID-19 pandemic: bad road infrastructure. Using road infrastructure as an instrument for mobility reductions we assess the causal effect of mobility reduction on infections. The study shows that keeping mobility of people low is a main factor to reduce infections. Aggregating over all regions, our results suggest that there would have been about 63,000 infections less on May 5th, 2020, if mobility at the onset of the disease were 10 percent lower.
    Keywords: Digital technology,Mobility data,Regional road infrastructure,Germany,COVID-19
    JEL: R11 R12 I18
    Date: 2020

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