1 ICT in Latin America. A microdata analysis ICT in Latin America A microdata analysis Editors ...

247 Pages·2011·2.73 MB·English

ICT in Latin America. A microdata analysis
ICT in
Latin America
A microdata analysis
Editors
Mariana Balboni
Sebastián Rovira
Sebastián Vergara
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ECLAC
The document entitled “ICT in Latin America. A microdata analysis” is one of the main outcomes of the “Observatory
for the Information Society in Latin America and the Caribbean (OSILAC) Third Phase” project carried out by the
United Nations Economic Commission for Latin America and the Caribbean (ECLAC) with financial support from
the International Development Research Centre of Canada (IDRC). The project has been also benefited from the
collaboration and engagement of a team of researchers from Latin American countries and from the collaboration of
National Statistical Offices.
We would like to thank Cesar Cristancho for his statistical assistance with ICT databases, Daniela Montiel for English
editing and Angélica Siegel for translation.
The views expressed in this document, which has been reproduced without formal editing, are those of the authors and
do not necessarily reflect the views of the above-mentioned organizations.
LC/R.2172
Copyright © United Nations, june 2011. All rights reserved
Printed in Santiago, Chile – United Nations
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ICT in Latin America. A microdata analysis
Contents
Introduction 5
Mariana Balboni, Sebastián Rovira and Sebastián Vergara
A. ICT at household level in Latin America 9
I. Determinants of ICT Access 11
Matteo Grazzi and Sebastián Vergara
II. Patterns of Internet use 41
Matteo Grazzi
III. Impact of Internet use on individual earnings 69
Lucas Navarro
IV. Gender differences in Internet use 95
Lucas Navarro and Martha Sánchez
B. ICT and firm performance in Latin America 119
I. ICT and labor productivity in Colombian manufacturing industry 121
Luis H. Gutiérrez
II. ICT in Chilean firms 145
José Miguel Benavente, Nicolás Lillo, Javier Turén
III. Science and technology, ICT and profitability in the manufacturing sector in Peru 159
Mario D. Tello
IV. Impact of ICT and innovation on industrial productivity in Uruguay 185
Griselda Charlo
V. ICT, organizational change and firm performance: evidence from Argentina 203
Elisa Calza and Sebastián Rovira
C. ICT in Latin America: concluding remarks 239
Mariana Balboni, Sebastián Rovira and Sebastián Vergara
About the authors 247

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ICT in Latin America. A microdata analysis
Introduction
Mariana Balboni
Sebastián Rovira
Sebastián Vergara
Economic growth is based on technology, innovation and, more broadly, knowledge. In
addition, Information and Communication Technologies (ICT) are key tools in promoting
innovation activities, technology diffusion, and knowledge generation within societies.
Indeed, as Information Society paradigm matures, effective use of ICT becomes an
indispensable device in promoting sustainable growth. Unfortunately, Latin America is
relatively delayed in these aspects and important economic policy debates in the region
deal with how to promote its insertion in the knowledge-based economy. In order to
examine determinants, characteristics and impacts of innovation activities and technology
diffusion, the use of microdata is a promising field. In particular, the study of access, use,
diffusion and effects of ICT across different economic agents —individuals, households
and firms— may generate key insights for an adequate design, implementation and
assessment of public policies.
In a conceptual perspective, we can understand ICT as a key dimension of technical
change and economic growth. Several decades ago, Schumpeter (1942)1 highlighted
the creative destruction as a central process of technological and economic evolution
of societies. This process states that at every moment there is a process of knowledge
creation and destruction: new ideas, processes, products and organizational forms
emerge; while others disappear. This process is, basically, driven by innovation. Since
this wide conception of innovation, several scholars have proposed more precise
definitions. For instance, Freeman and Perez (1988)2 classified innovation activity among
four different categories: i) incremental innovations; ii) radical innovations; iii) changes
in the technological system and iv) changes in the techno-economic paradigm. In this
perspective, ICT revolution corresponds to changes in the techno-economic paradigm,
as ICT include a set of interconnected innovations which can not only modify the scene
of a particular industry, but also of all industries and the whole economy. Thus, changes
in techno-economic paradigms related to ICT revolution redefine trajectories not only
in the technological and economic spheres, but also in the social scene. Thus, ICT are
1 Schumpeter, J. (1942). Capitalism, Socialism and democracy, New York: Harper
2 Freeman, C. and C. Perez (1988), “Structural crises of adjustment business cycles and investment behaviour”, in Dosi, G.,
Freeman, C. Nelson, R. Silverberg, G. and L. Soete (Eds.) (1988), Technical change and economic theory, London: Pinter.
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not only promoting the creative destruction process as a key underlying force behind
technological and economic changes, but also generating opportunities and new ways of
value creation that promote economic growth and development.
Indeed, the diffusion of ICT may have several implications, not only in economic terms
but also in social and political dimensions. For example, the recent World Summit on
Information Society highlighted ICT as a key device for development, with direct impacts
on education, health and government services as well as on strengthening democracy,
reducing poverty and promoting innovation and economic growth (WSIS, Geneva 2003
and Tunis 2005).3 Nevertheless, it is increasingly clear that ICT access is not evenly
distributed within and between countries, which leads to the conclusion that potential
benefits are also not equally distributed among different populations. Indeed, potential
impacts of ICT are neither automatic nor extended to all individuals. This uneven ICT
access, as well as other economic and social differences, can be worsened if there are
no adequate policies to guarantee digital access and benefits to all sectors of society.
ICT present a great potential in the reduction of social and economic differences, but it
could also deepen pre-existing economic or social inequalities. Thus, public policies must
promote the positive role of new technologies.
Paradoxically, empirical evidence concerning determinants and diffusion channels of
technology and knowledge in Latin America is scarce. In fact, there are important gaps and
aspects to analyze and to understand with respect to both innovation and ICT at individual,
household and firm levels. Innovation is a non-linear and complex process with the
participation of several sources and subject to high degrees of uncertainty and cumulative
learning. At the same time, there are several agents and institutions that participate directly
or indirectly in the process, being the interrelations and links among them a central element
of innovation outcomes. A better understanding of the phenomenon is a key aspect for
the development of more inclusive and effective ICT public policies. The implementation
of statistical and econometric techniques by using microdata, in particular from National
Household Surveys and National Innovation Surveys, provide an interesting and appealing
framework to analyze the phenomena in order to start closing this research gap.
This book is the final report of the ECLAC-IDRC project Observatory for the Information
Society in Latin American and the Caribbean (OSILAC), Third Phase”.4 OSILAC III is a
cooperating project between the International Development Research Centre (IDRC)
and the Division of Production, Productivity and Management, ECLAC-UN, which aims at
understanding the dynamics of the ICT evolution and revolution and producing evidence
on its potential to promote socio-economic development. As such, microdata analysis
3 The World Summit on the Information Society (WSIS) was a conference about information, communication and
information society sponsored by United Nations. The WSIS was held in two phases; the first phase took place in
Geneva from 10 to 12 December 2003, and the second phase took place in Tunis, from 16 to 18 November 2005.
4 See http://www.eclac.cl/socinfo/osilac/
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ICT in Latin America. A microdata analysis
drawn from National Household Surveys and National Innovation Surveys in Latin America
were used in the framework of the project in the attempt to reach those objectives. Both
statistical information sources provide attractive potentialities in order to investigate not only
determinants of innovation activities and technology diffusion, but also its economic impacts.
In recent years, the OSILAC project has fostered the development of a core list of
internationally comparable indicators related to ICT diffusion in Latin America. OSILAC
statistical information shows that although the usage of some ICT, such as mobile phones
is growing widely, the level of use is still very far from those of developed countries,
and broadband access indicators show that Latin America is not growing at their same
rate. In addition, OSILAC has demonstrated that social and economic factors are powerful
determinants of Internet access, particularly income level, education and geographical
location. Interestingly, OSILAC’s studies on ICT economic impacts have also confirmed
that it is not the amount of equipment that triggers productivity and contributes to welfare,
but rather the equipment use.5 Thus, higher levels of capabilities among individuals and
workers are essential to promoting ICT benefits among all population segments.
This book collects nine econometric articles organized in two main sections. Section A
provides evidence with respect to ICT diffusion at household level in seven Latin American
countries: Brazil, Chile, Costa Rica, Mexico, Paraguay, El Salvador and Honduras.
These studies include cross-country comparisons, as statistical information used is
similar across countries. Indeed, the analyses of this section are based on harmonized
data from the OSILAC Online Statistical Information System,6 which compiles indicators
from National Household Surveys in Latin America. Then, section B presents empirical
results concerning ICT impacts on firm performance for five Latin American countries:
Argentina, Chile, Colombia, Peru and Uruguay. Unfortunately, these studies are not
comparable and are only country specific because of the particular characteristics of
each National Innovation Survey. The firm level studies were produced in collaboration
with the Regional Dialogue on the Information Society Network (DIRSI).
In section A, Chapter I - “Determinants of ICT Access” analyzes different socioeconomic
aspects that affect computer adoption and Internet penetration at household level
in seven Latin American countries. It also investigates the role of other factors not
commonly studied in the literature, such as complementarities of Internet use at different
locations and geographical network effects. Chapter II - “Patterns of Internet Use” is the
first cross-country analysis of Internet use in Latin America. In doing so, it disentangles
5 Regional Seminar “Growth, Productivity and ICT”, ECLAC Santiago de Chile 2007. Presentations are available at
http://www.cepal.org/cgi-bin/getProd.asp?xml=/socinfo/noticias/noticias/0/27970/P27970.xml&xsl=/socinfo/tpl/p1f.
xsl&base=/socinfo/tpl/top-bottom.xslt.
6 The Statistical System integrates harmonized data collected from National Household Surveys of 17 Latin American
countries. The National Household Surveys contain some ICT variables which allow the calculation of the digital
divide between and within countries by considering different income and educational quintiles, age cohorts and rural/
urban areas. See http://www.eclac.org/tic/flash/default.asp?idioma=IN.
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the determinants of Internet access from the determinants of Internet use. It is also
the first exercise in the region that investigates the determinants of particular Internet
use applications. Chapter III - “The Impact of Internet Use on Individual Earnings” uses
matching techniques to examine the Internet impact on individual earnings. Given their
different Internet use patterns, the analysis is implemented for salaried and self-employed
workers separately. Finally, Chapter IV - “Gender Differences in Internet Use” analyzes
the gender dimension as a determinant of the different Internet usage patterns.
In section B, Chapter I - “ICT and Labour Productivity in Colombian Manufacturing
Industry” estimates ICT impact on labor productivity by using an extended Cobb-Douglas
production function. It also investigates the role of both human capital and organizational
changes in explaining labor productivity and potential complementarities with ICT
investment in Colombia. Chapter II - “ICT in Chilean Firms” analyzes manager’s perception
with respect to ICT impact on sales, profits, margins and production costs in a reduced
sample of Chilean firms. Chapter III - “Science and Technology, ICT and Profitability
in the Manufacturing Sector in Peru” investigates the impact of different technological
indicators on firm profitability. It also displays several aggregate indicators concerning the
situation of technology and innovation activities in Peru. Similarly, Chapter IV - “Impact
of ICT and Innovation on Industrial Productivity in Uruguay” studies the effect of ICT and
innovation investment on productivity. Interestingly, it also investigates the effects of ICT
and innovation activities on the demand for skilled and unskilled workers. This empirical
exercise represents one of the first attempts in Latin America to test the complementarity
or substitution hypotheses between ICT and employment at firm level. Finally, Chapter
V - “ICT, Organizational Change and Firm Performance: Evidence from Argentina”
investigates the relation between productivity and ICT, controlling for organizational
changes and improvements in human capital. Additionally, it test the complementarity
hypothesis among these firm dimensions.
Finally, section C - “ICT in Latin America: Concluding Remarks”, resumes the main
conclusions and implications derived from the empirical evidence. It also discusses the
benefits and limitations of using microdata in analyzing ICT diffusion in Latin America
and some relevant issues to investigate in the future research agenda. Overall, this
book represents one of the first regional efforts in order to evaluate and understand
different ICT dimensions by using microdata. It also provides empirical examples on the
potentials and constraints of microdata analysis concerning ICT at individual, household
and firm levels. Furthermore, it shows how the use of ICT microdata can support the
proper design of public policies that promote the disseminations of ICT benefits across
all population segments. This fact is also encouraging several Latin American countries
to improve the implementation of different economic and social surveys that increasingly
include innovation and technology dimensions.
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ICT in Latin America. A microdata analysis
A. ICT at household level in Latin America
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