nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2020‒08‒17
twenty-one papers chosen by
Marek Giebel
Universität Dortmund

  1. Technology Boom, Labor Reallocation, and Human Capital Depreciation By Hombert, Johan; Matray, Adrien
  2. Transatlantic Technologies: The Role of ICT in the Evolution of U.S. and European Productivity Growth By Robert J. Gordon; Hassan Sayed
  3. The Real Effects of Modern Information Technologies By Itay Goldstein; Shijie Yang; Luo Zuo
  4. Payment card fraud: global trends and empirical evidence on Internet card fraud in Italy By Guerino Ardizzi; Elisa Bonifacio; Laura Painelli
  5. Capability Accumulation and Conglomeratization in the Information Age By Chen, J.; Elliott, M.; Koh, A.
  6. Capital incentive policies in the age of cloud computing: An empirical case study By Raphaela Andres; Timothy DeStefano; Thomas Niebel; Steffen Viete
  7. Financial intermediation and technology: What’s old, what’s new? By Boot, Arnoud; Hoffmann, Peter; Laeven, Luc; Ratnovski, Lev
  8. The Role of Institutional Infrastructures in Financial Inclusion-Growth Relations: Evidence from SSA By Kazeem B. Ajide; Ibrahim D. Raheem; Olorunfemi Y. Alimi; Simplice A. Asongu
  9. Backwardness Advantage and Economic Growth in the Information Age: A Cross-Country Empirical Study By Khuong Vu; Simplice A. Asongu
  10. Capital dynamics, global value chains, competitiveness and barriers to FDI and capital accumulation in the EU By Amat Adarov; Robert Stehrer
  11. All about the state-Fifty years of innovative technology to deliver an inclusive financial sector By Rouse, Marybeth; Batiz-Lazo, Bernardo; Carbo Valverde, Santiago
  12. Germany’s ‘Lex Apple Pay’: Payment Services Regulation Overtakes Competition Enforcement By Jens-Uwe Franck; Dimitrios Linardatos
  13. An empirical study on Internet-based false news stories: experiences, problem awareness, and responsibilities By Gruener, Sven
  14. Communication, Expectations and Trust: an Experiment with Three Media By Anna Lou Abatayo; John Lynham; Katerina Sherstyuk
  15. Disaggregate Consumption Feedback and Energy Conservation By Andreas Gerster; Mark A. Andor; Lorenz Götte
  16. Challenges for the Marginalised Youth in Accessing Jobs - How Effective is Public Service Delivery? By Khondaker Golam Moazzem; A S M Shamim Alam Shibly
  17. Winners and losers from COVID-19: Evidence from Google search data for Egypt By Abay, Kibrom A.; Ibrahim, Hosam
  18. The Geography of Business Dynamism and Skill Biased Technical Change By Hannah Rubinton
  19. Does the internet change attitudes towards immigrants? Evidence from Spain By Alessio Romarri
  20. Competitiveness in Pakistan: A Case Study of the ICT Industry By Usman Qadir; Musleh ud Din; Ejaz Ghani
  21. China’s Digital Economy: Opportunities and Risks By Longmei Zhang; Sally Chen

  1. By: Hombert, Johan; Matray, Adrien
    Abstract: Using matched employer-employee data from France, we uncover an "ICT boom-cohort discount" on the long-term wage of the large cohort of skilled workers entering in the Information and Communication Technology (ICT) sector during the late 1990s technology boom. Despite starting with 5% higher wages, these workers experience lower wage growth and end up with 6% lower wages fifteen years out, relative to similar workers who started outside the ICT sector. Other moments of the wage distribution are inconsistent with selection effects. These workers accumulate human capital early in their career that rapidly depreciates, implying that labor reallocation during technology booms can have long-lasting effects.
    JEL: E24 J24 O33
    Date: 2019–11
  2. By: Robert J. Gordon; Hassan Sayed
    Abstract: We examine the role of the ICT revolution in driving productivity growth behavior for the United States and an aggregate of ten Western European nations (the EU-10) from 1977 to 2015. We find that the standard growth accounting approach is deficient when it separates sources of growth between ICT capital deepening and TFP growth, because much of the effect of the ICT revolution was channeled through spillovers to TFP growth rather than being limited to the capital deepening pathway. Using industry-level data from EU KLEMS, we find that most of the 1995-2005 U.S. productivity growth revival was driven by ICT-intensive industries producing market services and computer hardware. In contrast the EU-10 experienced a 1995-2005 growth slowdown due to a paucity of ICT investment, a failure to capture the efficiency benefits of ICT, and performance shortfalls in specific industries including ICT production, finance-insurance, retail-wholesale, and agriculture. After 2005 both the U.S. and the EU-10 suffered a growth slowdown, indicating that the benefits of the ICT revolution were temporary rather than providing a new permanent era of faster productivity growth. This joint transatlantic post-2005 slowdown is consistent with the broader view that ongoing innovation has been less potent in boosting productivity growth compared to earlier decades of the postwar era.
    JEL: E01 E24 O33 O47 O51 O52
    Date: 2020–06
  3. By: Itay Goldstein; Shijie Yang; Luo Zuo
    Abstract: Modern information technologies have greatly facilitated timely dissemination of information to a broad base of investors at low costs. To examine their effects on the real economy, we exploit the staggered implementation of the EDGAR system from 1993 to 1996 as a shock to information dissemination technologies. We find that the EDGAR implementation leads to an increase in the level of corporate investment but a decrease in the investment-to-price sensitivity. We provide evidence that improved equity financing and reduced managerial learning from prices are the underlying mechanisms that explain these real effects, respectively. In addition, we show that the EDGAR implementation leads to an improvement in performance in value firms but a decline in performance in high-growth firms where learning from the market is particularly important.
    JEL: G12 G14 G31 M41
    Date: 2020–07
  4. By: Guerino Ardizzi (Banca d'Italia); Elisa Bonifacio (Banca d'Italia); Laura Painelli (Banca d'Italia)
    Abstract: The expansion of retail trade at global level, spurred by online transactions (e-commerce), has led the European legislator to strengthen safety//security measures. This paper aims to assess the trend of card fraud in recent years, taking into account the latest regulations. After an extended period of growth, since 2016 the online fraud rate has recorded a decline in Italy and Europe. Empirical analyses of banks’ data carried out in Italy show that the decrease is correlated with successive improvements in anti-fraud measures over recent years. The paper also shows the main anti-fraud measures adopted by intermediaries (e.g. strong authentication and risk mitigation models) as well as protection mechanisms for customers in the event of fraud (e.g. exercise of the right to a refund within one day after filing the request), making it safer to buy online.
    Keywords: Internet, fraud, payment cards, card fraud rate, online transactions, security
    JEL: C22 C23 D12 E21
    Date: 2020–06
  5. By: Chen, J.; Elliott, M.; Koh, A.
    Abstract: The past twenty years have witnessed the emergence of internet conglomerates fueled by acquisitions. We build a simple theoretical model to study this. Following Wernerfelt (1984) we endow firms with scarce competencies which drive their competitiveness across markets. Firms can merge to combine their competencies, spin-off new firms by partitioning their competencies, or procure unassigned competencies. We study stable industry structures in which none of these deviations are profitable. We find an upper and lower bound on the size of the largest firm, and show that as markets value more of the same competencies abrupt increases in these bounds occur.
    Date: 2020–07–20
  6. By: Raphaela Andres (ZEW Mannheim); Timothy DeStefano (Harvard Business School); Thomas Niebel (ZEW Mannheim); Steffen Viete (ZEW Mannheim)
    Abstract: This paper assesses whether current policy environments are appropriate for the emergence of cloud computing technology. In particular, this research uses firm level data for Germany and the United Kingdom to examine the impact of capital incentive programmes (a common policy present in most OECD countries) on cloud adoption. The design for many of these policies target investments in physical capital while excluding digital services like the cloud. Firms view digital investments and digital services as substitutes, therefore narrowly defined incentive programmes may actually discourage the use of emerging tools like cloud computing, which are found to enable the growth and performance of young entrants. Overall, the results find that while capital incentive policies encourage firm investments in ICT and other forms of capital, they actually reduce the probability of cloud adoption. Policy makers may therefore need to reconsider the design of capital incentive programmes within their jurisdictions.
    Date: 2020–08–13
  7. By: Boot, Arnoud; Hoffmann, Peter; Laeven, Luc; Ratnovski, Lev
    Abstract: We study the effects of technological change on financial intermediation, distinguishing between innovations in information (data collection and processing) and communication (relationships and distribution). Both follow historic trends towards an increased use of hard information and less in-person interaction, which are accelerating rapidly. We point to more recent innovations, such as the combination of data abundance and artificial intelligence, and the rise of digital platforms. We argue that in particular the rise of new communication channels can lead to the vertical and horizontal disintegration of the traditional bank business model. Specialized providers of financial services can chip away activities that do not rely on access to balance sheets, while platforms can interject themselves between banks and customers. We discuss limitations to these challenges, and the resulting policy implications. JEL Classification: G20, G21, E58, O33
    Keywords: communication, financial innovation, financial intermediation, fintech, information
    Date: 2020–07
  8. By: Kazeem B. Ajide (University of Lagos, Nigeria); Ibrahim D. Raheem (EXCAS, Liège, Belgium); Olorunfemi Y. Alimi (University of Lagos, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This paper investigates the role of institutional infrastructures in the financial inclusion-growth nexus for a panel of twenty countries in sub-Sahara Africa (SSA).Employing the System Generalized Method of Moments (GMM), the following insightful outcomes are established. First, while there is an unrestricted positive impact of physical access to ATMs and ICT measures of financial inclusion on SSA’s growth but only the former was found significant. Second, the four institutional components via economic, political, institutional and general governances were also found to be growth-spurring. Lastly, countries with low levels of real per capita income are matching up with other countries with high levels of real income per capita. The empirical evidence of some negative net effects and insignificant marginal impacts are indication that imperfections in the financial markets are sometimes employed to the disadvantage of the poor. On the whole, we established positive effects on growth for the most part. The positive effects are evident because the governance indicators compliment financial inclusion in reducing pecuniary constraints hindering credit access and allocation to the poor that deteriorate growth.
    Keywords: Financial Inclusion; Economic Growth; Governance; System Generalized Method of Moments (GMM)
    JEL: G20 I10 O40 P37
    Date: 2020–01
  9. By: Khuong Vu (National University of Singapore, Singapore); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This paper seeks to gain insights into whether developing countries benefit more from the backwardness advantage for economic growth in the Information Age. The paper examines this concern through three complementary approaches. First, it derives theoretical grounds from the existing economic models to support the hypothesis that the internet, inter alia, enables developing countries to reap greater growth gains from technology acquisition and catch-up. Second, the paper uses descriptive evidence to show that the growth landscape has indeed shifted decisively in favor of developing countries in the Internet Age in comparison to the pre-internet period. Third, using rigorous econometric techniques with data of 163 countries over a 20-year period, 1996-2016, the paper evidences that developing countries on average reap significantly greater growth gains from internet adoption in comparison to the average advanced country. The paper discusses policy implications from the paper’s findings.
    Keywords: backwardness advantage; developing countries; internet; technology catch-up; GMM
    JEL: O40
    Date: 2020–01
  10. By: Amat Adarov (The Vienna Institute for International Economic Studies); Robert Stehrer (The Vienna Institute for International Economic Studies)
    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
  11. By: Rouse, Marybeth; Batiz-Lazo, Bernardo; Carbo Valverde, Santiago
    Abstract: This paper documents the long-term nature of technological innovations which have transformed retail finance and addressed financial exclusion. The paper also contributes to the body of literature on the state as an entrepreneur. The roots of financial inclusion are traced back to the 1960s with a discussion of the role played by the state, in contrast to that of the private sector and disruptive innovation. The case of the world-recognised mobile payment service M-Pesa, which has been credited with transforming access to financial services in Africa, is then examined. The empirical results suggest that the state was actively involved in the development and deployment of applications of information and communication technologies which led to M-Pesa. This study provides support for policies that promote mobile banking technology as a means of enhancing financial inclusion. The study also confirms that public-private partnerships, together with an enabling regulatory environment, facilitate technological innovation.
    Keywords: Disruptive technology; financial inclusion; innovation; state as an entrepreneur; Kenya
    JEL: G20 H70 O31
    Date: 2020–07–20
  12. By: Jens-Uwe Franck; Dimitrios Linardatos
    Abstract: As of January 2020, Section 58a of the German Payment Services Supervisory Act (PSSA) provides a right for payment service providers and e-money issuers to access technical infrastructure that contributes to mobile and internet-based payment services. This right of access is intended to promote technological innovation and competition in the consumers’ interests in having a wide choice among payment services, including competing solutions for mobile and internet-based payments. The provision has been dubbed ‘Lex Apple Pay’ as it seems to have been saliently motivated by the objective to give payment service providers the right of direct access to the NFC interfaces of Apple’s mobile devices. In enacting Section 58a PSSA, the German legislature has rushed forwards, overtaking the EU Commission’s ongoing competition investigation into Apple Pay as well as the pending reform of the German Competition Act, which is aimed precisely at operators of technological platforms, which enjoy a gatekeeper position. This article explores the scope of application and the statutory requirements of this right of access as well as available defences and possible legal barriers. We point out that, to restore a level playing field in the internal market, the natural option would be to further harmonize EU payment services regulation, including the availability of a right of access to technical infrastructure for mobile and internet-based payment services and e-money issuers.
    Keywords: ‘Lex Apple Pay’; Technology platforms; Antitrust; Payment Services Regulation; Mobile Payment; Access to NFC interfaces; Wallet Apps; Internal Market Regulation
    JEL: K21 K22
    Date: 2020–06
  13. By: Gruener, Sven
    Abstract: The Internet has significantly reduced the marginal costs of generating and disseminating information. The human information portfolio includes correct and incorrect information. False news stories constitute a challenge for our democracy. Therefore, scientists are increasingly interested in redesigning the information ecosystem. This paper addresses the problem awareness of university students in the realm of false news stories. With the help of a questionnaire, we seek for interesting correlations to generate hypotheses that can be analyzed in further studies with new data (i.e., exploratory study). The hypotheses read as follows: (i) Facebook users are more likely to suspect to be in touch with false news stories if they are interested in politics. People are less likely to assume to deal with false news stories the stronger they trust in others and the more emphasis they put on the opinions of others, (ii) False news stories are perceived as a problem at the societal level but not at the individual level, (iii) Men more often than women believe to be in touch with false news stories; men overestimate their ability to spot false news stories. People who fear false news stories are likely to believe that they could detect such information better than the average, and (iv) People see operators of platforms to be in charge of false news stories; people seem to have less confidence in the government.
    Date: 2020–07–25
  14. By: Anna Lou Abatayo (Bocconi University, University of Hawaii at Manoa and University of Guelph); John Lynham (University of Hawaii at Manoa); Katerina Sherstyuk (University of Hawaii at Manoa)
    Abstract: We study how communication under differ popular media affects trust game play. Three communication media are considered: traditional face-to- face, Facebook groups, and anonymous online chat. We consider post-communication changes in player expectations and preferences, and further analyze the contents of group communications to understand the channels though which communication enhances sender and receiver behavior. For senders, social, emotional and game-relevant contents of communication all matter, significantly influencing both their expectations of fair return and preferences towards receivers. Receiver increased trustworthiness is mostly explained by their adherence to the social norm of sending back a fair share in return for the full amount received. Remarkably, these results do not qualitatively differ among the three communication media; while face-to-face had the largest volume of messages, all three media proved equally effective in enhancing trust and trustworthiness.
    Keywords: communication technology; laboratory experiments; trust games; contents analysis
    JEL: C72 C92 D83
    Date: 2020–07
  15. By: Andreas Gerster; Mark A. Andor; Lorenz Götte
    Abstract: Novel information technologies hold the promise to improve decision making. In the context of smart metering, we investigate the impact of providing households with appliance-level electricity feedback. In a randomized controlled trial, we find that the provision of appliance-level feedback creates a conservation effect of an additional 5% relative to a group receiving standard (aggregate) feedback. These conservation effects are largely driven by reductions in electricity use of 10% to 15% during peak hours. Consumers with appliance-level feedback hold more accurate beliefs about the energy consumption of different appliances, consistent with the mechanism in our accompanying model. Our result suggests that conservation effects from a smart-meter rollout will be much larger if appliance-level feedback can be provided. Based on a sufficient statistics approach, we estimate that appliance-level feedback could raise consumer surplus by about 570 to 600 million Euro per annum for German households.
    Keywords: Randomized controlled trial, disaggregation, consumption feedback, energy conservation
    JEL: D12 D83 L94 Q41
    Date: 2020–06
  16. By: Khondaker Golam Moazzem; A S M Shamim Alam Shibly
    Abstract: The study brings forth the challenges of marginalised youth in accessing jobs and how effective is the public service delivery in addressing their challenges. Taking a life cycle approach, the study identifies four categories of challenges which include livelihood, education, training and employment-related issues of the youth. Lack of transparency and accountability of the concerned public offices deprive youths in accessing essential services related to these challenges. A standard operating procedure (SOP) should be maintained in order to ensure effectiveness, transparency and accountability of these public services. Increased budgetary allocation is required in a number of accounts, such as for better housing facilities, for accessing tertiary-level education and establishment of new schools, educational equipment, ICT labs and skill development of teachers. Establishment of specialised industrial estates/zones may be taken into consideration in regions where marginalised youths’ concentration is high. Effective GO–NGO–private sector collaboration in accessing information and providing soft–hard skills of training, is also important.
    Keywords: Youth, public service, youth employment, education, training, private sector
    Date: 2020–03
  17. By: Abay, Kibrom A.; Ibrahim, Hosam
    Abstract: Evolving pieces of evidence show that services are hardest hit by the COVID-19 pandemic, both globally and in Egypt. Employing Google search data, we examine the implications of COVID-19 on demand for various services in Egypt. • We find that demand for those services that require face-to-face interaction, including hotels and restaurants, air travel and tourism services, significantly dipped after Egypt detected the first COVID-19 case and more so after the Egyptian government introduced major restrictions and curfews. For instance, in the first two months of the outbreak of the pandemic, February and March, demand for hotel and restaurant services contracted by about 70 percent. • In contrast, demand for services that substitute or reduce personal interactions, such as information and communications technologies (ICT) and delivery services, have enjoyed a significant boost. Demand for ICT services tripled, while demand for delivery services doubled in the four months since the outbreak of the pandemic. • Intuitively, these results suggest that individuals and enterprises operating in these sectors are expected to experience heterogenous impacts and damages associated with the pandemic. Our results, along with other evolving evidence, reinforce that those services and sectors negatively affected by the outbreak and spread of COVID-19 deserve attention. • Finally, our analysis highlights the potential of near real-time "big data" to substitute and complement conventional data sources to estimate economic impacts and, hence, inform immediate and medium-term policy responses.
    Keywords: EGYPT, ARAB COUNTRIES, MIDDLE EAST, SOUTHWESTERN ASIA, ASIA, coronavirus, coronavirus disease, Coronavirinae, internet, Information and Communication Technologies (icts), demand, recreation, pandemics, technology, Covid-19, Google searching, Google trends, online search, Google search, lockdown
    Date: 2020
  18. By: Hannah Rubinton
    Abstract: This paper seeks to explain three key components of the growing regional disparities in the U.S. since 1980, referred to as the Great Divergence by Moretti (2012). Namely, big cities saw a larger increase in the relative wages of skilled workers, a larger increase in the relative supply of skilled workers, and a smaller decline in business dynamism. These trends can be explained by differences across cities in the extent to which firms adopt new skill-biased technologies. In response to the introduction of a new skill-biased, high fixed cost but low marginal cost technology, firms endogenously adopt more in big cities, in cities that offer abundant amenities for high-skilled workers and in cities that are more productive in using high-skilled labor. The differences in adoption can account for the increasing relationship between skill intensity and city size, the divergence of the city size wage premium by skill group and the changing cross sectional patterns of business dynamism. I document a new fact that firms in big cities invest more in Information and Communication Technology per employee than firms in small cities,consistent with patterns of technology adoption in the model.
    Keywords: Skill Biased Technical Change; Technology Adoption; Economic Geography
    JEL: R12 O33
    Date: 2020–07–21
  19. By: Alessio Romarri (Universitat de Barcelona & IEB)
    Abstract: In this paper, I empirically evaluate the effect of exposure to the Internet on Spanish attitudes towards immigrants. Exploiting a confidential, innovative survey dataset, I am able to identify a relationship between Internet access and attitudes towards immigrants at the micro (municipal) level. I address the endogeneity of Internet availability by looking at pre-existing voice telecommunication characteristics and using outcome variables before and after the arrival of the Internet. Results show that Internet availability between 2008 and 2012 is associated with a better knowledge of (national) immigration dynamics and that it leads to an overall improvement in attitudes towards immigrants. This result is particularly strong among young and urban individuals. Additionally, I find that access to the Internet reduces political support for the Partido Popular, Spain’s traditional right-wing party.
    Keywords: Internet, attitudes, voting
    JEL: J15 J17
    Date: 2020
  20. By: Usman Qadir (Pakistan Institute of Development Economics, Islamabad); Musleh ud Din (Pakistan Institute of Development Economics, Islamabad); Ejaz Ghani (Pakistan Institute of Development Economics, Islamabad)
    Abstract: In developing countries, vegetable markets are inefficient in terms of information exchanges between producers and consumers on food safety attributes. This study attempts to investigate the determinants of pesticide residues and estimate information efficiency of vegetable market, by using data collected from a representative sample of 360 farmers in Pakistani Punjab. Chromatography technique is employed to quantify pesticide residues in four common vegetables. Majority of the vegetable samples surpasses the maximum residues limits; hence, they are lemons (bad products). Results of pesticide residue model show that magnitudes of pesticide residues in vegetables vary with pesticide quantity and spray interval at the farm level. Results of information efficiency model reveal that vegetable prices are negatively but insignificantly correlated with pesticides residues, implying that vegetable market is a lemon market in Pakistan. Proper implementation of food safety standards and product labelling may help to provide safe vegetables to consumers.
    Keywords: Vegetables, Information Asymmetry, Lemons Market, Gas Chromatography, Pesticide Residues, Food Safety, Pakistan
    Date: 2019
  21. By: Longmei Zhang; Sally Chen
    Abstract: China’s digital economy has expanded rapidly in recent years. While average digitalization of the economy remains lower than in advanced economies, digitalization is already high in certain regions and sectors, in particular e-commerce and fintech, and costal regions. Such transformation has boosted productivity growth, with varying impact on employment across sectors. Going forward, digitalization will continue to reshape the Chinese economy by improving efficiency, softening though not reversing, the downward trend of potential growth as the economy matures. The government should play a vital role in maximizing the benefits of digitalization while minimizing related risks, such as potential labor disruption, privacy infringement, emerging oligopolies, and financial risks.
    Keywords: Asia and Pacific;Supply and demand;National accounts;Unemployment;Labor market policy;Financial services;Digital economy,Fintech,Productivity,Employment,Financial stability,Government Policy and Regulation,Macroeconomic Analyses of Economic Development,General,digitalization,Tencent,Alibaba,ICT
    Date: 2019–01–17

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