Measuring ICT Impacts Using Official Statistics
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1 UNCTAD Expert Meeting In Support of the Implementation and Follow-Up of WSIS: USING ICTs TO ACHIEVE GROWTH AND DEVELOPMENT Jointly organized by UNCTAD, OECD and ILO 4-5 December 2006 Measuring ICT Impacts Using Official Statistics by Ms. Sheridan Roberts Consultant, STI, OECD The views expressed are those of the author and do not necessarily reflect the views of the United Nations
2 Measuring ICT impacts using official statistics Sheridan Roberts (consultant to OECD) 1 1
3 Introduction Policymakers everywhere want to know about the impacts of ICT. They are interested in economic as well as social impacts. This presentation includes early findings of an OECD project examining the work of national statistical offices in measuring the impacts of ICT it covers both economic and social impacts. 2 2
4 Measurement of economic impacts of ICT history In the late 1990s, OECD started to focus on ICT measurement using official statistics. It brought representatives from national statistical offices together to form the Working Party on Indicators for the Information Society. Early work focused on the contribution of an ICT sector to a country s economy and resulted in the first definition of the ICT sector in Work followed on the use of ICT by businesses, with a particular interest in e-commerce and, ultimately, its impact on business performance. In the well known S curve, there are three stages of e-commerce measurement proposed readiness, intensity and impact. 3 3
5 The S-curve: e-commerce measurement priorities Level of Electronic Commerce Activity Im pact Intensity Readiness Original source: Industry Canada Time 4
6 Measurement of economic impacts of ICT history The S curve concept has been extended beyond e- commerce to cover ICT more generally (including, in more recent years, electronic business). It was recognised that the third stage impacts would be statistically challenging this has proved to be the case. 5 5
7 Economic impacts of ICT subjective measures The WPIIS released the first model survey of ICT use by businesses in 2001 and the second in The 2005 survey included a question on business perceptions of the benefits of Internet selling such questions can be useful but are seen as too subjective for many purposes. 6 6
8 Economic impacts of ICT objective measures OECD s Growth Project (2001): ICT plays three roles through capital deepening, as ICT is an important asset in overall business investment through multi-factor productivity growth in the production of ICT products through MFP growth due to the use of ICT, through efficiency gains in individual firms, or through network/spillover effects from its use. Later empirical work by OECD and others on the role of ICT macro-economic data on ICT investment sectoral contribution to economic growth firm-level evidence, based on work with statistical offices. 7 7
9 More recent approaches to measuring economic impacts of ICT: some examples Very large scale data matching (Eurostat) Longitudinal/integrated collection strategy (Australia) ICT satellite accounts (Australia and Chile) Surveys of ICT investment/expenditure (Eurostat) such data are an important contributor to productivity analyses. Work by UK on linking ICT investment/use firm level data (e.g. on ICT investment, e-commerce and linked business processes) with measures of output to show productivity impacts (covered in Tony Clayton s talk). 8 8
10 Eurostat: assessing ICT impacts by linking data from different sources The objective is to identify how ICT adoption affects business behaviour and performance by linking firm level data (microdata) from different statistical sources e.g: enterprise ICT community survey (business ICT use survey) SBS (structural business statistics) CIS (innovation surveys). Common approach across the EC, with one NSO (UK) taking the lead and coordinating the project. March 2008 plan to present a framework which could be integrated into the standard tools of the European Statistical System. 9 9
11 Australia: Integrated Business Characteristics Strategy ABS Integrated Business Characteristics Strategy produces business characteristics and financial data for longitudinal and cross-sectional purposes. The Business Characteristics Survey component includes questions on business characteristics, use of IT and innovation. SMEs are selected in a series of panels, each of which remains in the survey for 5 years, thus giving a longitudinal series at firm level. Panels overlap over time (panel 1 starts year t, panel 2 year t+1 etc). Taxation data are used for financial data (turnover, wages & salaries, and value added) and to extend the time series available at firm level. Business characteristics (e.g. whether the business sells via the Internet) can be matched with performance indicators (e.g. change in turnover) to infer impacts. Productivity analysis should be possible as value added and measures of labour input, such as wages and employment, are available. First results for SMEs are expected by the end of 2006 for the period (with financial data for preceding years and following year). 1010
12 Australia: 1111
13 ICT satellite account (Australia, ) Satellite account methodology is articulated in the international System of National Accounts 1993 (SNA93). It allows for an expansion of the national accounts for selected areas of interest maintains links to the concepts and structures of core national accounts enables consistency with key economic aggregates such as GDP. The basic compilation framework is the national accounts supply and use system, adapted to focus on ICT products and ICT industries. ICT products include computer hardware, software, telecommunication assets, computer services and telecommunication services. ICT industries go beyond the ICT sector include own account investment in ICT by non ICT industries, including government. Demand includes demand by business, government, households. ICT GDP is a major output. It represents the total market value of ICT products produced in Australia after deducting the cost of goods and services used up in the process of production. 1212
14 Economic impacts of ICT findings Firm level studies (OECD, 2005) suggest that use of ICT has positive impacts on firm performance and productivity, but benefits occur primarily, or only, when accompanied by other changes and investments (for example, where skills have been improved and organisational changes have been introduced) firm-level evidence also suggests that the uptake and impact of ICT differs across firms, varying according to size of firm, age of the firm, activity, etc. ICT and productivity (Nordic studies). Positive link between ICT (use/expenditure) and productivity Danish productivity studies show that ICT capital contribution to labour productivity growth is increasing over time (5% of growth in the period to 31% in ). ICT satellite accounts findings Australia. ICT accounted for $36.2 billion or 4.6% of total GDP in (experimental estimates). Chile. ICT accounted for 3.4% of total GDP in
15 Measurement of social impacts of ICT history This area has received less attention from official statisticians than the measurement of economic impacts. Increasingly, measures of ICT are appearing in social surveys, including those based on the OECD s model surveys of ICT use (2002 and 2005). Such surveys are revealing that ICT is changing how people do things such as: how and where they work what kinds of things they study and what jobs they do how they do everyday activities such as shopping, banking, dealing with business and government how they spend their income how they spend their time how they obtain information how they relate to family and community. 1414
16 Challenges of measuring social impacts of ICT For economic impacts, arguably the ultimate questions of micro- and macro-economic impact are being addressed and are measurable. The ultimate questions in respect of society are less well defined and likely to be harder to measure. For instance, how can a question like Is ICT, on balance, beneficial for this society? be addressed? Or Will ICT improve health and education outcomes in my country? Such questions are more subjective and multi-faceted than the ultimate economic questions of productivity and economic growth. 1515
17 More recent measurement approaches Retrospective examination of expected impacts of ICT to see whether they have occurred (Canada, 2006) Labour Force surveys used to measure teleworking (UK, 2005) Time use survey (Australia, 2006) Household expenditure survey (Australia, ) as well as collecting information on expenditure on ICT goods and services, the survey expenditure diary asked respondents to indicate if they had ordered goods or services using the Internet. Social capital (Australia, Finland 2006) defined as networks together with shared norms, values and understandings that facilitate cooperation within and among groups (OECD) 1616
18 Time use surveys (Australia 2006) The Australian survey of 2006 has two components, each capturing ICT-related information. The interview covers ICT access and use. The diary asks what people are doing if the respondent only says they were using a computer or the Internet then the activity is coded to "Audio/visual media nec" if further information is provided, such as paying bills, then the activity is coded to the relevant classification for that activity in both these cases a technology code is recorded, and this is Internet" or "personal computer" similarly, if a respondent says they were using a mobile phone for an activity then a communication code of "mobile phone" is recorded. The ICT information that will be available from the diaries is dependent on what the respondent records in the booklet some information will be available using a combination of the activity, communication and technology classifications. 1717
19 Social capital (Australia and Finland) Australian Framework (ABS, 2004) includes indicators on frequency of contact with friends and relatives using ICT and contacting government using the Internet. It is suggested that contact with others is positive and provides individuals with identity, social roles and social support mechanisms; arguably ICT facilitates such contact (case study evidence). Finland (Statistics Finland, 2006) went further and looked at the relationship between social capital and ICT use. 1818
20 Some findings. Use of ICT by people continues to increase in OECD and non-oecd countries including use of computers, the Internet, broadband and mobile phones People are spending more of their income on ICT products in Canada, average household spending on ICT increased from 4.2% to 4.5% of total spending between 1997 and 2003 despite falling ICT costs (Statistics Canada) In France, between 1960 and 2005, household expenditure on ICT increased from 1.3% to 4.2% of the household budget (INSEE). 1919
21 Some findings.cont. People are increasingly using the Internet to do the same things in new ways e.g. shopping, communicating, banking and other financial activities, finding information e.g. in Finland, 37% of Internet users did electronic banking in 1998 and 78% in 2005; 12% of Internet users did online shopping in 1998 and 34% in 2005 (Statistics Finland 2006). ICT in education in Finland, in 2005, students used ICT for a variety of purposes, with nearly half using ICT to learn language and just over 60% using the WWW for study purposes the role of ICT in improving educational outcomes is much harder to measure. 2020
22 Some findings.cont. ICT is affecting how and where people work Australia (2000, household use of IT survey). While only 7% of employed adults had an agreement with their employer to work from home on an ongoing basis, five out of six of those adults reported using ICTs such as portable PCs, mobile phones, to work from home. UK (2005 Labour Force data). In Spring 2005, 2.1 million people in the UK working mainly from home (or using home as a base) were only able to do so because they used both a telephone and a computer. In the UK, the proportion of the workforce who teleworked using both a telephone and a computer rose from 3% of the total workforce in 1997 to 7% in
23 Some findings.social capital There is strong evidence from Canada that people are communicating more using ICT fixed/mobile phones, (Statistics Canada, 2006). Statistics Finland (2006) found significant correlations between ICT use and components of social capital (2004 data), with the most significant being with community involvement (participation in voluntary or leisure activities). They also found significant correlations between use of ICT (especially number of phone calls and SMS messages) and several components of social capital (e.g. size of the social network, community involvement). In Australia, in 2002, a large proportion of people had contact with relatives or friends (living elsewhere) in the previous week using ICT (phone, ); the ABS speculated that the increased use of communication technologies such as mobile phones, s and web-based chat rooms may also have helped extend interaction as people substitute these more convenient and wider-reaching forms of contact for time spent together. (ABS, 2006) 2222
24 Some findings.cont. Some expected impacts of ICT which are not occurring (Statistics Canada, 2006; Statistics Finland, 2006) reduction in mail. While communication by ICTs (in the form of , text messages etc) is increasing greatly, in Canada at least, physical mail is also increasing (though much more slowly) e-commerce vs bricks and mortar retailing. E-tailing in Canada is growing fast but still very small; normal retailing is growing as well reduction of fixed line phones and their use in favour of mobile. In the US and Canada, both are growing strongly (though in Finland there is a trend towards households having only a mobile phone) increase in Internet use and reduction in time spent on other activities. Among Canadian Internet users, time spent watching TV has decreased slightly but is not offset by the increase in time spent on the Internet. In Finland, in 2005, slightly fewer than half of medium to high Internet users reported a decrease in TV watching; about two thirds reported no change in time spent reading or talking on the phone; 90% reported no change in time spent with friends. 2323
25 Finally. This project is at an early stage I would be interested to hear of work by statistical offices on measuring the impacts of ICT. Please contact me at sheridanroberts@hotmail.com or Sam Paltridge at sam.paltridge@oecd.org 2424
26 References ABS, 2001 Use of the Internet by householders cat. no ABS, 2004 Information Paper, Measuring Social Capital: An Australian Framework and Indicators cat. no ABS, 2005 Household Use of Information Technology, cat. no ABS, 2006 ICT Satellite Account Australia, cat. no ABS, 2006 Aspects of Social Capital Australia cat. no INSEE, 2006 La consommation des ménages en TIC depuis 45 ans: un renouvellement permanent Nordic Council of Ministers, 2005 Nordic Information Society Statistics 2005 OECD, 2001 The New Economy: Beyond the Hype. OECD, 2003 ICT and Economic Growth OECD, 2005 Guide to Measuring the Information Society OECD, 2005 Science, Technology and Industry Scoreboard 2005 ONS, 2005 Home-based working using communication technologies Statistics Canada, 2006 Our Lives in Digital Times Statistics Finland, 2006 From Citizen to ecitizen: Results from statistical surveys about Finns use of ICT in Statistics Finland, 2006 Social Capital in Finland: Statistical Review 2525
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