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ICT Capital Spending, ICT Sector, and Firm Productivity: Evidence from Indonesian Firm-Level Data

Author

Listed:
  • Chaikal Nuryakin

    (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta)

  • Faisal Rachman

    (Institute for Economic and Social Research, Faculty of Economics, University of Indonesia)

  • Ashintya Damayati

    (Institute for Economic and Social Research, Faculty of Economics, University of Indonesia)

  • Nia Kurnia

    (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta)

  • Moslem Afrizal

    (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta)

Abstract

This study examined the impact of ICT on firm productivity in Indonesia. Using unbalanced panel data of medium and large manufacturing firms, we performed two kinds of estimation. The first estimation is Cobb-Douglas production function with output as the dependent variable. Capital was grouped into non-ICT capital and ICT capital in order to determine the impact of ICT on firm’s output creation. The second estimation used total factor productivity as the dependent variable, where TFP was estimated using Levinsohn-Petrin productivity estimator. As other internal and external factors were added to the regression as control variable, the study provides early evidence that while the impact of R&D and innovation still needs to be further elaborated, ICT capital may have a positive, but not always significant, impact on firm’s production and productivity in Indonesia.

Suggested Citation

  • Chaikal Nuryakin & Faisal Rachman & Ashintya Damayati & Nia Kurnia & Moslem Afrizal, 2017. "ICT Capital Spending, ICT Sector, and Firm Productivity: Evidence from Indonesian Firm-Level Data," LPEM FEBUI Working Papers 201713, LPEM, Faculty of Economics and Business, University of Indonesia, revised Oct 2017.
    • Handle: RePEc:lpe:wpaper:201713
    as

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    References listed on IDEAS

    as
    1. Elsadig Musa Ahmed, 2017. "Erratum to: ICT and Human Capital Spillover Effects in Achieving Sustainable East Asian Knowledge-Based Economies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(3), pages 1113-1113, September.
    2. Andrew B. Bernard & J. Bradford Jensen, 1999. "Exporting and Productivity," NBER Working Papers 7135, National Bureau of Economic Research, Inc.
    3. Andrew B. Bernard, 2004. "Exporting and Productivity in the USA," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 20(3), pages 343-357, Autumn.
    4. Elsadig Musa Ahmed, 2017. "ICT and Human Capital Spillover Effects in Achieving Sustainable East Asian Knowledge-Based Economies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(3), pages 1086-1112, September.
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    More about this item

    Keywords

    ICT — Productivity — TFP — R&D — Innovation;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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