Misconceptions about ICT, Part 2

Posted on April 4, 2017  /  0 Comments

This post is part of series of responses to observations made during a discuss on the “Aluth Parlimenthuwa” show on TV Derana. Read Part I here.

In Part 2, I address policymaker misconceptions about the contributions of ICT to economic growth. In the talk show, at around the 29th minute, the policymaker refers to a study that claimed that 10 percent growth in broadband penetration would result in some x percent economic growth. This is most likely the widely cited 2009 econometric study by Christine Qiang and Carlo Rossotto which claimed 0.81 percent economic growth for every 10 percent growth in mobile connectivity in low and middle income countries. The study is best known for its claim of 1.38 percent growth associated with a 10 percent increase in broadband connectivity in low and middle-income countries.

I think the reference was to the lower 0.81 growth because the rest of the conversation was about Sri Lanka being unusual in having more SIMs than people. The claim was that mobiles were not being used properly in Sri Lanka because otherwise the country’s growth rate would be radically different from what it is today.

Sri Lanka’s mobile growth began to taper down in 2011. Until then year-on-year growth was very high. And economic growth after the war, was high, as high as 9.1 percent in 2012. So this may appear peculiar. As mobile growth is tapering down (it was 11 percent in 2012 and negative in 2013), economic growth was hitting its highest level.
It’s actually not peculiar. Most people know that multiple factors contribute to economic growth. Never is it one thing. The North and the East coming back into the economy was the dominant factor in the immediate aftermath of the end of the conflict. The postulated puny 0.81 percent contribution from mobile would be washed out by these larger effects.

The systematic review of the effects of mobile rollout in rural areas clearly demonstrates that mobile growth has positive impact. The kinds of micro-studies analyzed in the review are much more persuasive to me than the top-down macro-econometric studies such as Qiang and Rossotto. But it is a given that effects do not arise from one factor alone, as in a chemistry experiment. In the real world, we are dealing with open systems where multiple factors interact to produce economic growth or lack thereof. It is simply unrealistic to expect one factor, and one factor that theoretically contributes some miniscule 0.81 could create the kinds of discernible differences expected by the speaker.

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