Report: Effects of Advances in ICT on Total Factor Productivity Workshop, September 3-6, 2013, Seoul, Republic of Korea

APO Member Countries

 

BRIEF DESCRIPTION/BACKGROUND OF THE PROJECT

For the past 10 years it was noted that there are many advances in relation to information and communications technology (ICT) which changed the way we do things from manual operations to automated operations, from print to web-based information dissemination, among others. These advances are seen in various sectors including the agriculture sector.

However, for some developing countries like the Philippines, these advances are seldom measured in terms of its impact or effect in productivity much more on Total Factor Productivity (TFP). The need to measure ICT effects in TFP becomes relevant if a country would like to pursue implementation of a nation wide ICT development program to align its policies and overall direction to specifically address current developmental gaps.

It is the objective of the project to identify barriers to more effective use of ICT for productivity and suggest measures to overcome the barriers or developmental gaps.

OBJECTIVES FOR PARTICIPATION

My primary objectives in attending the said workshop is to gain knowledge in measuring the effects of current project on ICT and prepare the unit i’m handling in establishing monitoring and evaluation system for future ICT based projects. Knowing and understanding the effects of ICT will help in designing an effective M&E at the firm and at the national level.

It was my expectation that an introduction in measuring ICT effects in TFP will be greatly dwelt with.

PROFILE OF PARTICIPANTS

The workshop was participated by a total of 18 participants from 16 APO member countries. Most of the participants came from government sector specifically from the science and technology, industries and planning organizations of the respective countries. On equal footing was the number of participants from the Academe and the National Productivity Organizations. There was only one private sector participant. Almost all the participants hold senior-level positions in their respective organizations.

Likewise there was only one participant from the Philippines.

SCOPE, CONTENT AND METHODOLOGY

The following topics were discussed:

a) Brief introduction on Productivity Measurement, Total Factor Productivity including Concepts and Fundamentals of TFP and Factors that influences TFP;
b) Role of ICT in Knowledge-based Economy for Productivity Enhancement and Future Trends;
c) Some recent Developments in ICT Applications in Manufacturing and Service Sectors in Asia Pacific and Europe;
d) How ICT impacts TFP, its relationship between ICT and TFP and what will be the future trends; and
e) Two case studies from the manufacturing and service sectors;

Training methodology included experts’ presentations, group discussions and workshop, country presentations and site visit. The site visit showcased the technological advances made by LG electronics in their products (e.g. televisions, cell phones, refrigerators, washing machines and other electronic devices).

The major inputs delivered by the resource persons were on the results of the case studies which proved that statistically ICT interventions/advances has significant effect in the subject industries. For instance, in textile, transport equipment, and metal and metal products industries, ICT has a positive and statistically significant effect of 18-22% on TFP. And the effect on the overall manufacturing is also estimated to be positive and sizeable at 12%. Unfortunately there was no case study for the agriculture sector.

The Philippine country paper focused on the ICT roadmap of the Philippines from 2011-2016 which is embodied in “The Philippine Digital Strategy: Transformation 2.0: Digitally Empowered Nation” most commonly referred to as the “PDS”. The following are some of the most critical indicators set per strategy as defined in the PDS document:

For Transparent Government and Efficient Services Delivery:

  • Increase citizen participation in governance and innovation
  • Increase in interactive, transactional and ultimately networked public online services
  • Enhanced public trust and increased transparency in government
  • Improved efficiency in government operations
  • Enhanced competitiveness ranking

For Internet Opportunities for all People:

  • Improved and cost-efficient broadband service delivery, network infrastructure expansion and upgrades through increased competition
  • Increase in universal basic broadband internet to all barangays through publicly shared access
  • Secure, reliable ICT infrastructure and safe online experience

For Investing in People: Digital Literacy for All

  • Improve the delivery and quality of education using ICT
  • Improve employability of workforce in ICT and ICT-enabled sectors
  • Enhance ICT entrepreneurship
  • Increase appreciation and responsive use of ICT by citizenry

For ICT Industry and Business Innovation for National Development

  • Increase use of ICT among MSMEs
  • Increase in investment and more business for the IT/BPO industry and ICT sector
  • Enhanced high-value ICT capacity and higher number of ICT-related jobs

It should be noted that direct increase in Total Factor Productivity is not one of the indicators set in the PDS. But it is a common knowledge in the industry that automation in an organization can bring about an increase in office productivity. And in one of the World Bank academic studies (as cited in the PDS document), every 10% increase in broadband penetration boosts Gross Domestic Product (GDP) by an average of 1.3% and every 10% increase in mobile industry density correlates with a 0.7% increase in GDP.

The other country presentations also focused on the current status and future direction of their respective governments in terms of ICT development. There were also presentations that highlighted the recent developments in TFP measurement methodology specifically in collecting data.

OUTCOMES AND EVALUATION

The workshop reinforced by knowledge that ICT advances or ICT related interventions at the firm and sectoral levels have positive effect in productivity. THe resource person especially Professor Arup Mitra from Delhin University, India, was the most effective in terms of communicating and making the hardest technical terms understandable to a non-economist. Second most interesting presentation came from the case studies given by the resource person from Belgium and South Korea.

The project met its objectives in the sense that it highlighted the importance in investing in ICT to improve productivity. It is also successful in presenting the various levels of ICT development among the APO-member countries through the country presentations. The resource persons were all knowledgeable about the subject, although there were some who could not elaborate further some details of the case studies due to the study limitations itself.

However, i would not recommend the course for a beginner in TFP measurement since it will be too overwhelming. Most of the participants are actually practitioners and have been doing TFP measurement in their respective countries. There are also quite a number of participants who are involved in the ICT industries and it is fortumate that their countries have institutionalized (or regularly conducting) TFP meaurement in place.

RECOMMENDATIONS AND ACTION STEPS

The following are the general recommendations of the participants to ensure that whatever advances in ICT will have a positive effect in productivity:

a) Assessment of the current state of ICT sector and its application across sectors is necessary to ensure that overinvestment will not happen;
b) Adopting appropriate policies and safety nets should also be established to avoid widening of digital divide – gap between those who have and those who have not;
c) Conduct of purposive collection of data across industries and at the firm level will help in gauging the contribution of ICT interventions in improving productivity;
d) Encourage firms to invest in ICT needs to be done; and
e) COnduct of ICT-literacy program for the youth and elderly and people in the countryside.

The Academy has a good track record of implementing ICT-related interventions at the rural areas and agriculture sector; follow through is needed to ensure that pioneering efforts will be institutionalized.

Since the workshop is not on skills development and limited to knowledge acquisition, my personal action plan to disseminate the knowledge gained in this workhop revolves in the application of my learning to ICT-related projects of the unit where i belong.

SUBMITTED BY:

MONICA SALIENDRES
Division Director
Center for Quality and Competitiveness
Development Academy of the Philippines

 

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