ICT, human capital and productivity in Chinese cities

Abstract

This study uses a rich city-level dataset to analyse the relationship between information and communication technology (ICT) and productivity performance in China during 2003–2016. It is shown that ICT positively contributes to Chinese cities’ productivity in conjunction with other growth determinants, such as human capital, foreign direct investment (FDI), infrastructure development, financial market development, and research and development investment. An identifiable amplified effect is detected when ICT exceeds certain threshold in Chinese cities. This threshold level is reached in over a half of Chinese cities particularly cities in coastal regions. Finally, ICT is found to substitute human capital in China’s context. Since the average education level in Chinese cities is low, the finding is in line with the argument that ICT only improves productivity of high-skilled workers but worsens that of the low-skilled ones.