Financial Analysis of the ICT Industry

Abstract

This article attempts to quantify the following things: 1. the technical efficiency of the ICT (Information and Communication Technology) sector in 52 countries in 2006–07 and in 45 countries in 2002–03 by using the DEA method. 2. Malmquist Index of Productivity Growth in the ICT sector in 45 countries between these two periods. 3. the proportions of the productivity growth attributable to efficiency and technical change. 4. the effect on total factor productivity (TFP) of catching-up, the export ratio, Broadband policy and technical readiness using a regression analysis. As a result, the paper finds that: 1. The ICT sectors in South Korea and Argentina were relatively efficient in 2002–03, while in 2006–07, the ICT sectors in Bahrain, Brazil and Sweden showed relative efficiency. 2. The productivity growth in the ICT sector in developing and newly industrialised countries is slightly lower than the growth in developed and transition countries, suggesting the catching-up of developing and newly industrialised countries. This catching-up effect is also confirmed in the regression analysis. 3. Technological readiness, which is a measure of the agility with which an economy adopts existing technologies, has a positive impact on TFP growth.