nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2023‒10‒02
five papers chosen by
Marek Giebel, Universität Dortmund

  1. Diversify or Not? – The Link between Global Sourcing of ICT Goods and Firm Performance By Alexander Schiersch; Irene Bertschek; Thomas Niebel
  2. Internet (Power) to the People: How to Bridge the Digital Divide By Julian Hidalgo; Michelle Sovinsky
  3. Information Technology, Income Inequality and Economic Growth in sub-Saharan African Countries By N.M. Odhiambo
  4. The Gold of Industry and the Core of the Military: China's Rare Earths Strategy and its Implications for Korea By Park, Sohee
  5. Policy Design from a Network Perspective: Targeting a Sector, Cascade of Links, Network Resilience By Temel, Tugrul; Phumpiu, Paul

  1. By: Alexander Schiersch; Irene Bertschek; Thomas Niebel
    Abstract: Our paper contributes to the discussion about Europe’s digital sovereignty. We analyze the relationship between firm performance and the diversification of sourcing countries for imported ICT goods. The analysis is based on administrative data for 3888 German manufacturing firms that imported ICT goods in the years 2010 and 2014. We find that firms that diversify the sourcing of ICT goods across multiple countries perform better than similar firms with a less diversified sourcing structure. This result holds for value added as well as for gross operational surplus as performance measures and for two different indicators of diversification.
    Keywords: ICT goods imports, global sourcing, digital sovereignty, firm performance
    JEL: F14 F23 L14 L23 D24
    Date: 2023
  2. By: Julian Hidalgo; Michelle Sovinsky
    Abstract: Due to global lockdowns driven by the COVID-19 pandemic, the pervasiveness of inequalities in digital access is more salient. As a result, finding strategies to narrow the digital divide has moved to the forefront of public policy. We examine the impact of a pricing subsidy in Colombia to learn about what hinders low-income populations from adopting internet services. Our model allows take-up to depend on the types of plans offered as well as the rate of diffusion in their neighborhood. We find that increasing the diffusion rate (via internet literacy programs) is more beneficial to takeup among households in the lowest socioeconomic markets and in less technically savvy markets relative to a pricing subsidy. Pricing subsidies reduce the digital divide by 13% points but over half of that is due to the impact on the diffusion rate. Our results suggest that non-price policies are equally important to bridge the digital divide.
    Keywords: digital divide, network effects, internet diffusion, limited choice sets, data restrictions, discrete choice models, price subsidies, internet access
    JEL: L15 L51 L86 D12 D31
    Date: 2023–09
  3. By: N.M. Odhiambo (University of South Africa)
    Abstract: In this paper, the dynamic relationship between ICT, income inequality and economic growth in sub-Saharan African (SSA) countries is examined during the period 2004-2014. Three ICT and three income inequality indicators were used to examine this linkage. The ICT indicators used include internet penetration, mobile phone penetration and fixed broadband subscription, while the income inequality indicators include the Gini coefficient, the Atkinson index and the Palma ratio. Using the Generalised Method of Moments (GMM) estimation technique, the study found that, on the whole, an increase in ICT development unconditionally leads to an increase in economic growth in the countries under study. The study also found that the threshold level of income inequality, which should not be exceeded in order for the positive impact of ICT on economic growth to be sustained, depends on the ICT proxy used and the income inequality indicator. Specifically, the study found that for ICT to have a sustained positive impact on economic growth, i) the Gini coefficient in the mobile penetration specification should not exceed 0.520; ii) the Gini coefficient and Atkinson index in the internet penetration specification should not exceed 0.531 and 0.560, respectively; and iii) the Gini coefficient, Atkinson index and Palma ratio in the fixed broadband subscriptions should not exceed 0.551, 0.633 and 4.664, respectively. Policy implications are discussed.
    Date: 2022–01
  4. By: Park, Sohee (Korea Institute for Industrial Economics and Trade)
    Abstract: The rare earth elements (REE) refer to 17 metallic elements, including 15 lanthanides and two non-lanthanides. REEs are classified into two broad categories based atomic weight: light rare earth elements (LREEs) and heavy rare earth elements (HREEs). There are seven LREEs, with low atomic numbers and small masses, and 10 HREEs, with high atomic numbers and large masses. Rare earths are strategic materials (core minerals) directly related to resource security, defense, and industrial security. They are used in various industries, including defense, aerospace, information and communications technologies (ICT), artificial intelligence (AI), medical care, new energy, energy conservation, and environmental protection. Deposits of rare earths are concentrated in a handful of countries and regions, and this arrangement has made securing a stable supply of rare earths a key component of national economic competitiveness in the era of economic security. Currently, China is the only country on Earth in which all 17 REEs can be found. Not only does it have the largest proven deposits of rare earths in the world, it is also the largest miner and consumer of rare earths globally. Over the past 60 years, the Chinese government has been pushing the development of the rare earths industry. Two sayings illustrate the importance the government assigns to rare earths: they are “gold of industry” and the “core of the military” (HREEs are used in high-tech weapons manufacturing). China has designated rare earths as national strategic resources and has emphasized the importance of rare earths security. At the same, China has leveraged its rare earths in dealings with major export destinations such as Japan and the United States. In this context, this study aims to understand the development status of the rare earths industry in China. It focuses on the Chinese government’s major rare earths policies, and the implications these measures carry for Korean policy.
    Keywords: rare earths; rare earths policy; rare earths industry; strategic resources; economic security; national security; resource security; weapons manufacturing; export controls; trade policy; economic nationalism; China; US; Korea
    JEL: F13 F51 F52 L72 L78 O13 Q34 Q37 Q38 Q56
    Date: 2023–08–30
  5. By: Temel, Tugrul; Phumpiu, Paul
    Abstract: A computational methodology is proposed to: (i) characterize the upstream and/or downstream network of a targeted sector i, (ii) uncover the cascade of layers of links in the network, and (iii) measure the degree of network resilience. The methodology is implemented using Turkiye's 2018 input-output data to characterize the gaps and the type of policy reforms required to address them in the context of the targeted manufacturing sector. Market and competition policy reforms are discussed from a network perspective in such a way as to enhance the productivity of the manufacturing sector. Three findings are noteworthy. First, production activities of the manufacturing sector have strong links with regulated general purpose service sectors, including financial, energy-water-gas, and transport and ICT. Therefore, improved competition in the manufacturing sector will not necessarily increase its productivity even if competition policies perfectly support the market for manufacturing products. Second, the source-sink structure of Turkiye's manufacturing network illustrates that the manufacturing sector is the most dominant, whereas transport-ICT, energy-water-gas, and construction sectors are the potential sinks where large chunk of input flow ends up. Third, the cascade of three layers of links suggests that the upstream network of the manufacturing sector has a moderate level of resilience against the complete disruption of the intermediate layer.
    Keywords: graph theory; production network; network resilience; Turkiye; policy planning;
    JEL: C45 C67 D24 O21 O33
    Date: 2023–09–04

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