Understanding the Human Capital Dimension of ICT and Economic Growth in Transition Economies

Abstract

Human capital is one of the key factors affecting the expansion of ICT and the realization of macroeconomic outcomes in transition economies (TE). Research on ICT investments and their impact on the economic bottom-line have pointed to the shortage of technologically skilled ICT workers who can adopt, implement, innovate and maintain new information technologies in TEs. While ICT regulatory policies have shifted to encourage increased ICT investments, the ability to formulate and implement complementary practices to investments in ICT human capital development strategies remains a continuing problem. In this investigation we inquire into the relationship between investments in Telecoms (a subset of investments in ICT), and a full-time Telecom staff, and propose a two-phase approach allowing for formulating policy and strategies for complementary investments in the development of the ICT workforce. The proposed two-phase approach for formulating empirically-justifiable and theoretically sound HR strategies is then tested in the context of eight TEs. The framework of neoclassical growth accounting and the theory of complementarity provide the theoretical foundation for this inquiry, while multivariate regression and data envelopment analysis are utilized to conduct the data analysis.