Growth, labour productivity and ICT investment in Thailand

Abstract

Many studies have done on the impact of information and communication technology (ICT) on growth and productivity that they treated ICT capital stock as an individual input in the production process that contributes to productivity and growth. Although ICT has found to be one of the key determinants of productivity in the developed world, few studies have also found out the positive impacts of ICT on the developing world. However, there are still lacks of empirical works in the field that differentiate clearly with the literature which study background and descriptive studies of Thailand’s ICT development. This study attempts to examine the role of ICT in Thailand’s economy in the past decades. The study develops the framework by considering ICT as a production factor and applies it to interpret Thailand’s economic growth. The study contributes to the empirical literature on ICT and economic growth in Thailand. First, it attempts to estimate the ICT capital stock in Thailand by applying the perpetual inventory method. Second, based on such estimates, the study explore the contribution of ICT to Thailand’s economic growth by using growth accounting method that segregates ICT from all others forms of capital. According to study, ICT capital contributes positively on the Thailand economic growth and labour productivity. Average labour productivity growth rate of Thailand is 3.83% during 1991 to 2005. In terms of growth accounting analysis, the study found that, ICT capital contributes 6%, non-ICT capital contributes 41%, human capital contributes 7% and TFP contributes 46% respectively to average growth. In other word, average labour productivity has been positively affected by ICT development which comes from increase in ICT skills and ICT intensity such as PC per user and internet per user. Policy recommendation from our study are as follows: (1) increase ICT utilization in Thailand (2) increase the number of ICT professionals in Thailand (3) increase level of ICT education of the labour force in order to strengthen further labour productivity growth and last but not least (4) reduce digital divide between rural and urban of Thailand.