Analysis of firm-level computer investments: a comparative study of three Pacific-rim economies

Abstract

The impact of information technology (IT) on firm level productivity has been a subject of considerable research. Although a number of empirical studies have been reported, results are far from conclusive. Almost all of these studies are based on secondary data collected in the United States, which makes it impossible to compare productivity impacts under different economic and demographic settings. It remains unclear whether empirical findings obtained from US firms are also applicable to firms residing in other parts of the world. To answer this question, an empirical study was conducted to assess the impact of IT investment in firms operating in three economies (Hong Kong, Singapore, and Malaysia) in the Pacific Rim from 1983 to 1991. Our results indicate that while still small as a percentage of total capital compared with the United States, computer capital stock increased substantially in all economies during the period. Our production function estimates suggest that there are positive and excess returns in one of the three economies. Results of the analysis provide the basis to address issues such as national IT policy and the effect of economic dynamics on IT adoption.