An Analysis of the Impact of ICT Investment on Productivity in Developing Countries: Evidence from Cameroon

Transcription

1 Afrca Development, Vol. XXXIX, No. 4, 2014, pp Councl for the Development of Socal Scence Research n Afrca, 2015 (ISSN ) An Analyss of the Impact of ICT Investment on Productvty n Developng Countres: Evdence from Cameroon Arsene Honore Gdeon Nkama* Abstract To what extent have nvestments n Informaton and Communcaton Technologes (ICT) contrbuted to productvty growth n Cameroon? Ths paper explores the relatonshp between productvty and nvestment n ICT n Cameroon at the level of frms n Usng crosssectonal data and applyng a Cobb-Douglas functon, the study reveals that nvestment n ICT has no mpact on productvty, as the estmated coeffcent of ICT nvestment on productvty s not sgnfcant. Also, ICT nvestment has no mpact on labour productvty and labour ntensty. These fndngs dffer from Chowdhury and Wolf (2002) who found that ICT nvestment has a negatve and sgnfcant mpact on labour productvty n East Afrca. In Cameroon labour remans the key factor of value added growth. Ths seems to be realstc as the country has a growng workforce that tends to slow down salares. Snce labour s the abundant factor, t s proftable for frms to ncrease ther producton by recrutng addtonal unts of labour. If ICT nvestment contrbutes to rapd globalzaton of economes, t does not yet contrbute to productvty growth n Cameroon. Résumé Dans quelle mesure les nvestssements dans les technologes de l nformaton et de la communcaton (TIC) ont-ls contrbué à la crossance de la productvté au Cameroun? Cet artcle explore la relaton entre la productvté et l nvestssement dans les TIC au Cameroun au sen des entreprses en Sur la base de données transversales et en applquant la foncton Cobb-Douglas, l étude révèle que les nvestssements dans les TIC n ont pas d mpact sur la productvté, parce que l mpact estmé de l nvestssement dans les TIC sur la productvté n est pas sgnfcatf. En outre, l nvestssement dans les * Faculty of Economcs and Management, Unversty of Yaoundé II, Yaoundé, Cameroon. E-mal: ahgnkama@yahoo.com

2 118 Afrca Development, Vol. XXXIX, No. 4, 2014 TIC n a aucun mpact sur la productvté et l ntensté du traval. Ces résultats dffèrent des résultats obtenus par Chowdhury et Wolf (2002) selon lesquels l nvestssement dans les TIC a un mpact négatf et sgnfcatf sur la productvté des travalleurs en Afrque de l Est. Au Cameroun le traval reste le facteur clé de la crossance de la valeur ajoutée. Cela semble être réalste dans la mesure où le pays dspose d une mand œuvre abondante qu tend à ralentr l accrossement des salares. Pusque la man-d ouvre est le facteur abondant, l est avantageux pour les entreprses d augmenter leur producton en recrutant d avantage de travalleurs. S l nvestssement dans les TIC contrbue à la mondalsaton rapde des économes, elle ne contrbue pas pour autant à la crossance de la productvté au Cameroun. Introducton Evdence about the contrbuton of Informaton and Communcaton Technologes (ICT) nvestment to productvty and growth has been very controversal. In developed countres and especally among the G-7 countres, ICT nvestment has had a large mpact on productvty growth n the Unted States, for example, but n Japan, the Unted Kngdom and France labour productvty dd not ncrease despte a hgh level of nvestment n ICT (IMF 2001). In developng countres, ths controversy stll perssts. In the context of developed countres, Jorgensen et al., (2002) analysed the sources of US labour productvty growth n the post-1995 perod and presented projectons for both output and labour productvty growth for the next decade. They found that ICT played a substantal role n the US economy by revvng productvty. Ther projectons put the rate of productvty growth at 2.1 percent per year over the next decade. Daver (2002) showed that throughout , even f two thrds of the European Unon populaton reached or came much closer to the same levels of ICT dffuson as the US, ICT have so far delvered lmted overall productvty gans n Europe. Hempell (2002) found sgnfcant productvty effects of ICT on German servce sector. In many other studes, emprcal evdence for the effects of ICT nvestment on frms performance n the context of ndustralzed countres has reported postve effects n the case of US large enterprses (Brynjolfsson and Htt 2000 for example). Usng the producton functon approach, Brynjolfon and Htt (1996) found that the gross margnal product of computer captal ranges from 56 percent to 68 percent whle the gross margnal product on non-computer captal s between 4.14 percent and 6.86 percent n the Unted States frm-level data. An mportant number of studes have jontly consdered both developed and developng countres. Dewan and Kraemer, 2000 (Pohjola 2001) have

3 Nkama: An Analyss of the Impact of ICT Investment 119 estmated a Cobb-Douglas functon n a cross-countres analyss usng GDP as output and ICT captal, non-ict captal and labour hours as nputs. Based on data on 22 developed countres and 14 developng countres over the perod , results ndcate that the returns from ICT captal nvestments are postve and statstcally sgnfcant for developed countres but not sgnfcant for developng countres. In developed countres, the output elastctes of ICT captal, non-ict captal and labour are respectvely 0.057, and In developng countres results ndcate that ICT nvestments are not productve as the ICT elastcty s statstcally equal to zero. As ponted out by Pohjola (op ct.) and contrary to results from developed countres, the authors dd not nclude human captal n the producton functon. Investment n ICT beng strongly correlated wth nvestment n human captal, ths seems to explan dfferences n results n developed and developng countres. In explorng the mpact of nformaton technology nvestment on economc growth n a cross-secton of 39 countres n the perod , Pohjola (2000) appled the augmented verson of the neo-classcal growth model. Results ndcate that for the full sample, physcal captal has been a key factor n the growth of GDP per worker n both developed and developng countres whereas human captal and nformaton technology were shown to have had no strong mpact. However, n the smaller sample of 23 OECD countres, nformaton technology has had a strong mpact on growth. An explanaton for the poor or non-exstent mpact of ICT n developng countres could be the fact that developng countres have not yet nvested enough n ICT. Ths s not because ICT s not a prorty n developng countres, but because developng countres lag behnd developed countres n terms of nvestment level. The dffuson and ntroducton gap of ICT between developng and developed countres the former havng experenced ICT many years after the latter also explan ths concluson. As ICT s expected to take tme before havng ts full effects on productvty, t mght be normal that ICT s mpact n developed countres s greater than that n developng countres. Also, the ntensty of ICT use may explan the dfference. If one can fnd many studes centred on developed countres, t should be recognzed that less has been done for developng countres and especally sub-saharan Afrca. In developng countres, some recent studes on small and medum scale enterprses n the manufacturng sector n Inda have reported a postve lnk between ICT captal and productvty (Muller-Falke 2001) and between ICT adoptons and export performance (Lal 1996). In sub-saharan Afrca, Chowdhury and Wolf (2002) assessed the uses of nformaton and communcaton technologes and ther mpact on the economc performance of small and medum scale enterprses of Kenya, Tanzana and Uganda.

4 120 Afrca Development, Vol. XXXIX, No. 4, 2014 Fndngs suggest that the dffuson of ICT among East Afrcan small and medum scale enterprses s both ndustry and country specfc. The model, based on a Cobb-Douglas specfcaton, s modfed to take nto account ICT mpact on labour productvty, ICT mpact on return on nvestment and ICT mpact on market expanson. Emprcal fndngs suggest that nvestment n ICT has a negatve mpact on labour productvty and a postve mpact on general market expanson. But such nvestment does not have any sgnfcant mpact on enterprses return nor does t determne enterprses exporter status. Ths approach s very nterestng n the sense that t underlnes the relatonshp between labour ntensty, labour productvty and ICT nvestments. Ths paper s an attempt to contrbute to above-mentoned debate by measurng the effect of ICT nvestment on enterprse productvty n Cameroon. The analyss, concentrated on both secondary and tertary sectors, also dstngushes small sze from large sze enterprses. The paper s organzed as follows. Secton one s a bref revew of Cameroon s ICT nfrastructure that gves an dea of the ICT envronment wthn whch frms operate n Cameroon. Secton two presents the analytcal framework. Data used n the analyss are presented n secton three, followed by emprcal results n secton four. Secton fve presents some mplcatons of the results. In secton sx, the last secton, I dscuss relevant polcy recommendatons. Bref Profle of Cameroon s ICT Infrastructure Rados, televsons, fxed phones, moble phones, personal computers, and the nternet are the man ICT devces used to study access to the nformaton socety. Among these devces, rados are the most wdespread n developng countres, followed by televsons. In fact, the avalablty of rados s relatvely hgh as compared to other ICT devces n developng countres. One major reason s that rados can operate wth batteres (rather than requrng a man supply of electrcty) and ther prces are relatvely affordable for low ncome persons. For the other ICT devces, access to electrcty has lmted ther penetraton n developng countres as the development of new ICT tends to be dependent on the avalablty of energy. As an example, t s very lkely that n a regon wthout electrcty, there wll be few f any computers wth access to nternet. In Cameroon, access to electrcty s a major constrant for economc development n general and ICT penetraton n partcular. In the rural areas wth around 53 percent of the total populaton, access to electrcty s lmted to 23 percent (compared to 50 percent for Côte d Ivore for example) and lags far behnd urban areas where about 88 percent of the populaton had access to electrcty n 2001 (Cameroon Poverty Reducton Strategy Paper).

5 Nkama: An Analyss of the Impact of ICT Investment 121 Table 1: Selected ICT ndcators n selected countres, 2003 ICT ndcators Cameroon Côte D Ivore Senegal Afrca Total telephone subscrbers per 100 nhabtants Man telephone lnes per 100 nhabtants Cellular moble subscrbers per 100 nhabtants Internet users per nhabtants Personal computers per 100 nhabtants Compared to Senegal and Côte d Ivore, Cameroon lags behnd n terms of access to ICT nvestment as one can observe n Table 1. Total telephone subscrbers, man telephone lnes, cellular subscrbers, nternet users and personal computer per 100 nhabtants are not only lower than the Afrcan average level, but also lower than those countres wth relatvely same level of development. Ths dfferental n ICT penetraton mght be a source of dfferentals n growth potental. In fact t can be expected that countres wth recent and low ICT penetraton perform lower than those wth longterm, deep and rapd penetraton n ICT. Theoretcal Framework Before presentng the emprcal results, t would be approprate to brefly present the structured framework that helps nterpret the regressons that follow. The framework focuses on two man ponts: the estmaton of producton elastcty wth respect to ICT nvestment and the measurement of the mpact of ICT on labour ntensty and labour productvty. The Output Elastcty of ICT Investment To dentfy the channels through whch ICT may affect the output or productvty of frms, let us consder the producton functon approach that can be summarzed as follows. Suppose the producton functon: Y = F ICT, NICT, L ) (1) ( Where, for frm the value added Y s produced from nputs consstng of ICT captal (ICT), non-ict captal (NICT), and labor (L).

6 122 Afrca Development, Vol. XXXIX, No. 4, 2014 Suppose that (1) assumes the smple Cobb-Douglas form and suppose also that the s are constant from one frm to another, one can wrte: 1 Y = A ICT NICT L (2) Takng natural logarthms, one obtans the followng: logy = LogA + 1 log ICT + 2 log NICT log L Specal attenton wll focus on that represents the elastcty of producton (value added) wth respect to the use of ICT captal. In other words, 1 s the output elastcty of ICT nvestment. If 1 > 1, a one-percent ncrease n ICT nvestment would lead to more than one-percent ncrease n output. In such stuaton, ncreasng ICT nvestment n the economy would be very mportant for boostng overall economc growth. The mportance of growth could therefore be explaned by the level of ICT nvestment n sectors accountng for a hgher percentage to aggregated output. On the contrary, a one-percent ncrease n ICT nvestment would generate less than one-percent ncrease n output. Comparson of 1 wth 2 and would amelorate the analyss. As 3 an example, f for a country 1 > Y ( = 2, 3) t would be more effcent for 1 = ths country to ncrease ts ICT nvestment as compared to non-ict nvestment and labor n order to accelerate growth. On the contrary, f for example 1 < Y ( = 2, 3) more emphass would be put on non-ict captal 1 = and labor f the country ams at boostng growth. 1 equal to zero means that ICT nvestment does not affect productvty growth; consequently, ncreasng nvestment on such assets could n a long run be economcally costly or non-vable. The Impact of ICT on Labour Intensty and Labour Productvty ICT nvestment can enhance enterprse performance due to some ndrect cost savngs n labour costs and by ncreased labour productvty. It can also affect the drect cost of frms nputs. An obvous example s when ICT nvestment reduces nformaton costs. ICT also affects nputs allocaton. It can have both substtuton and complementary effects. It s possble that ICT nvestments ncrease employment at the level of frms. On the other hand, t s also possble to magne that ncreased ICT nvestment could lead to job reductons as frms ncrease ICT ntensty (substtuton between ICT captal and labour). Both stuatons affect labour productvty. To assess the mpact of ICT nvestments on labour ntensty and labour productvty, let us consder the followng producton functon (Berndt and Morrson 1995). (3)

7 Nkama: An Analyss of the Impact of ICT Investment 123 * Y = F( K, L ) (4) Where, for frm producton Y s obtaned from nputs consstng of qualtyadjusted stock of aggregate captal K* and labour L. Suppose that (4) assumes the smple Cobb-Douglas form and suppose also that the s 1 are constant from one frm to another. One can wrte: Y Y = * = AK L (5) Takng natural logarthms, one obtans the followng: logy * = LogA + log K + log L (6) Suppose K * s the qualty-adjusted stock of aggregate captal and suppose t can be dvded nto ICT captal (ICT) and non-ict captal (NICT) as follows. * K = K ( ICT / K ) ( NICT / K ) (7) In logarthm form one obtans: log K * = log K + log( ICT / K ) + log( NICT / K ) (8) If ICT captal s more productve per monetary unt of servces than other captal, one would expect lbe postve. On the other hand, f ICT captal does not have any dfferental mpact, then = l = 0. Combnng (6) and (8) one gets: logy = log A + (log K + log( ICT / K ) + log( NICT / K )) + log L Assumng constant returns to scale ( + = 1) and solvng for log(l /Y ), gves 1 (9) where log( L / Y ) = a1 + a2 log( K / Y ) + a3 log( ICT / K) + a log( NICT / K ) a a = log / ; a = ( 1) / ; a = (1 ) / ; 1 A = (1 ) / (10) (11)

8 124 Afrca Development, Vol. XXXIX, No. 4, 2014 Equaton (10) gves the basc relatonshp between labour productvty, labour ntensty and ICT-captal ntensty. If 3 < 0, ICT-captal has a postve mpact on labour productvty as labour ntensty decreases. If 3 = 0, the effect of ICT-captal s not dfferent from non-ict captal. In fact, provded that 0 (as I assumed a Cobb-Douglas form, 0< <1) testng the null hypothess that ICT captal s not dfferent n ts productvty than non-ict captal s equvalent to a test of = 0. If = 0, 3 = 0. If ICT captal s more productve than non-ict captal, > 0 mples that 3 < 0 as 0< <1. Consequently, f ICT captal s more productve than other captal, t would lead to reduced labour ntensty, ceters parbus. Data and Summary Statstcs The man problem encountered here s the measurement of ICT captal. ICT captal s measured by expenses n ICT that nclude spendng on computer hardware equpment, computer software, computer servces, mantenance support servces, consultng servces, tranng, telecommuncaton equpment and servces. Each frm was asked to estmate such ICT nvestment. For frms that faled to ndcate ther ICT spendng, I assumed that n each sector the share of ICT captal n frms total captal s constant so that the share of ICT captal n total captal was used for these frms even though ICT nvestment can be ntra-ndustry specfc. The value added represents the frm s output. Non-ICT captal s measured by the value of total captal mnus the value of ICT captal. Total captal s estmated by the value of total physcal captal plus expendtures n ICT that are not ncluded n the captal stock expendture. The total labour hours represent the labour varable. In Cameroon and accordng to the legslaton, a workng day lasts eght hours and there are fve workng days per week. The total number of labour hours for a gven frm s measured by tmng the number of employees by per annum workng hours. The number obtaned s dmnshed by the equvalent of nne days for publc holdays. Ths brought us to about 2000 workng hours per annum. For further detals, results are presented n three man steps. In the frst step, I examne the relatonshp between ICT and producton n both ndustral and servce sector. In the second step, I analyse ths relatonshp usng data from the secondary sector and the tertary sector separately. Lastly, the analyss dstngushes small-sze enterprses from large-sze enterprses. Small-sze enterprses are defned here as frms havng less than 50 employees. Data are drawn from a sample of 81 enterprses of whch 46 are from the ndustral sector and 35 from the servce sector. These enterprses are among those

9 Nkama: An Analyss of the Impact of ICT Investment 125 contrbutng most to GDP and for whch data were avalable at ths tme. The tme perod s determned by the avalablty of data. Data are for the year 2004 and represent the most recent avalable data. The second type of data, whch are qualtatve data, help n understandng the behavour of frms n terms of nformaton about ICT, sklls upgradng n ICT knowledge and servces computerzaton. Emprcal Results Table 2: Summary statstcs K (n 10 6 ICT (n 10 6 NICT (n 10 6 Employees Ln(K/Y) Ln(ICT/K) Ln(NICT/K) CFA francs) CFA francs) CFA francs) Mean Medan Maxmum Mnmum Std. Dev The Output Elastcty of ICT Investment For the overall sample, the emprcal estmaton of equaton (3) provdes elastctes of value added wth respect to ICT captal, non-ict captal and labour. logy = log(ICT) log (NICT) log(L) (0.00) (0.61) (0.109) (0.00) R 2 = adjusted R 2 = (*) = probablty t statstcs; n = 81 The dependent varable s frms value added. ICT captal, non-ict captal and labour are ndependent varables. Both ndependent and dependent varables are expressed n logarthm form. Value added s most determned by labour. Accordng to results, a one percent ncrease n labour would lead to an ncrease of percent n productvty. Ths coeffcent s sgnfcant at fve percent as the probablty of t statstc s zero (less than 0.05). The ICT mpact on productvty s 0.043, meanng that f one ncreases ICT captal by 10 percent productvty would ncrease by 0.43 percent. Ths coeffcent s not only smaller, but also not sgnfcant, meanng that n Cameroon, ICT captal does not appear to affect productvty growth. Non- ICT captal has a mpact on productvty. Agan, ths coeffcent s not sgnfcant. These results corroborate the fact that n developng countres, labour, the abundant factor, s the man nput used n producton, and so consttutes the best channel through whch producton can be ncreased. Broadly speakng, captal (ICT and non-ict captal) s not an mportant determnant of productvty n Cameroon s enterprses.

10 126 Afrca Development, Vol. XXXIX, No. 4, 2014 One mportant explanaton for ths fndng s that frms do not operate at ther full capactes. The rate of utlzaton of producton capactes was estmated at about 60 percent n the ndustral sector n 2002, accordng to the Department of Forecast, Mnstry of Economy and Fnance. Equaton (3) that was also estmated for the ndustral sector gave the followng: logy = log(ICT) log (NICT) log(L) (0.018) (0.132) (0.607) (0.001) R 2 = 0.75 adjusted R 2 = (*) = probablty t statstcs; n = 46 In the ndustral sector, labour stll consttutes the man determnant of frms productvty wth a coeffcent of 0.76, meanng that n the ndustral sector n Cameroon f we ncrease labour by 10 percent, value added would ncrease by 7.6 percent. Ths coeffcent s sgnfcantly dfferent from zero at fve percent. As t can be observed, the mpact of ICT (0.23) s not sgnfcant. The same concluson apples to non-ict nvestment whose mpact on productvty s statstcally equal to zero. Because of hgh unemployment and consequently low salares, labour, the abundant factor, s more utlzed for producton and remans the most mportant determnant of output. In the tertary sector, estmatons gave: logy = log(ICT) log (NICT) log(L) (0.0048) (0.723) (0.05) (0.000) R 2 = adjusted R 2 = (*) = probablty t statstcs; n = 35 The 0.03 mpact of ICT nvestment on productvty s not sgnfcant. Labour consttutes the man determnant of productvty growth. In fact, f one ncreases labour by 10 percent n the servce sector, t s expected that productvty would ncrease by 8.5 percent. Ths coeffcent s sgnfcant at fve percent. Ths result ndcates that as a developng country, and havng an abundant unemployed labour force, Cameroon s tertary sector would ncrease ts productvty by ncreasng employment. Non-ICT nvestments have a postve mpact on productvty. The 0.23 coeffcent s sgnfcant at 5 percent. To ncrease productvty, Cameroon s tertary sector has to ncrease labour and non-ict captal. ICT captal would have no effect on productvty growth. Ths fndng s n contradcton wth what s really expected. In fact the tertary sector s the one that s supposed to get mportant benefts from ICT nvestment as compared wth other sectors. Equaton (3) was also estmated for small sze and large sze enterprses. The followng are the man fndngs.

11 Nkama: An Analyss of the Impact of ICT Investment 127 Estmaton of equaton (3) for small sze enterprses gave the followng. logy = log(ICT) log (NICT) log(L) (0.61) (0.91) (0.23) (0.000) R 2 = 0.53 adjusted R 2 = 0.49 (*) = probablty t statstcs; n = 45 In small sze enterprses, ICT captal has a non-sgnfcant negatve mpact on producton. Labour remans the fundamental factor of output growth. Consequently, any ncrease n ICT nvestment would ncrease the total costs of frms wthout leadng to any ncrease n productvty. Labour, as n other sectors or n other types of enterprses, remans the central determnant of output growth. Non-ICT captal s not a sgnfcant factor of output. In large-scale enterprses, labour s the most mportant determnant of output whle ICT nvestment does not have a sgnfcant mpact on productvty. The man trend observed n ndustral and tertary sectors s also vald for small sze and large-scale enterprses where estmatons gave: logy = log(ICT) log (NICT) log(L) (0.0031) (0.25) (0.43) (0.0041) R 2 = 0.56 adjusted R 2 = 0.52 (*) = probablty t statstcs; n = 36 To sum up, ICT nvestment does not affect enterprses productvty n Cameroon. Any nvestment of ths type would lead to an ncrease n producton costs wthout affectng total output. Can such nvestment affect labour ntensty and so labour productvty? The followng paragraph gves an answer to ths queston. But one would expect that as ICT nvestment does not affect total productvty, t wll not affect labour productvty even f some compensaton n terms of ncrease and decrease n labour or captal productvty would lead to the same concluson. The Impact of ICT on Labour Intensty and Labour Productvty In order to recaptulate regardng the mpact of ICT nvestment on labour ntensty and labour productvty, Equaton (10) was estmated for the 81 selected enterprses of the sample. Emprcal results gave the followng: log(l/y) = log(K/Y) log(ICT/K) log(NICT/K) (0.00) (0.0001) (0.507) (0.156) R 2 = 0.20 adjusted R 2 = 0.17 (*) = probablty t statstcs; n = 81 The value of ICT captal as a proporton of total captal has a postve mpact on labour ntensty. The coeffcent s 0.076, meanng that f ICT ntensty

12 128 Afrca Development, Vol. XXXIX, No. 4, 2014 ncreases by 10 percent, labour ntensty would ncrease by 0.76 percent. Ths mples that the stock of ICT captal has a negatve mpact on labour productvty as labour ntensty ncreases. Hence as frms ncrease the share of ICT captal stock to total captal stock, labour ntensty would ncrease and labour productvty would decrease. For a gven output, ncreasng labour ntensty mples ncreased labour unts and hence low labour productvty. The coeffcent measurng the mpact of ICT ntensty on labour ntensty and labour productvty s not sgnfcant; outlnng the fact that ICT ntensty does not affect labour ntensty and labour productvty n Cameroon s economy. The correspondng coeffcent for non-ict captal s Ths coeffcent, whch s greater than the ICT coeffcent, s not sgnfcant. The mpact of ICT captal s therefore not dfferent from the mpact of non-ict captal. However, results show that frms would beneft more by ncreasng the captal (total captal) output rato rather than ICT captal share as percentage of total captal stock. In the ndustral sector, emprcal estmaton of equaton (10) gves: log(l/y) = log(K/Y) log(ICT/K) log(NICT/K) (0.00) (0.0003) (0.90) (0.20) R 2 = 0.33 adjusted R 2 = 0.29 (*) = probablty t statstcs; n = 46 In the ndustral sector, ICT ntensty has a 0.02 non-sgnfcant mpact on labour ntensty. Ths seems realstc snce n ths sector and especally for Cameroon, frms need non-computerzed equpment and machnes to transform ther products. ICT captal s just used to mprove the productvty of both labour and non-ict captal. Ths s why the mpact of captal-output rato (0.45) s sgnfcant. As n the prevous case, non-ict nvestment does not have a sgnfcant mpact on labour ntensty and labour productvty. For the tertary sector, estmaton gves: log(l/y) = log(K/Y) log(ICT/K) log(NICT/K) (0.000) (0.47) (0.71) (0.68) R 2 = adjusted R 2 = (*) = probablty t statstcs; n = 36 In the servce sector, there s no sgnfcant mpact wth regard to ICT ntensty, non-ict ntensty or captal-output rato on labour ntensty and labour productvty, as ndcated n the above regresson, because of the nsgnfcance of correspondng estmated coeffcents. Hence ICT nvestment does not have any mpact on labour productvty n Cameroon.

13 Nkama: An Analyss of the Impact of ICT Investment 129 As seen from the followng regressons, ICT ntensty does not sgnfcantly affect labour ntensty and labour productvty n small-sze enterprses. In large-scale enterprses, non-ict captal ntensty s an mportant and sgnfcant determnant of labour ntensty and labour productvty. In large-scale enterprses, the mpact of non-ict ntensty (2.85) s sgnfcant at fve percent. Consequently f non-ict ntensty ncreases, labour ntensty would ncrease and labour productvty would decrease. In small sze enterprses, the followng estmatons are obtaned: log(l/y) = log(K/Y) log(ICT/K) log(NICT/K) (0.000) (0.0001) (0.84) (0.61) R 2 = 0.33 adjusted R 2 = 0.28 (*) = probablty t statstcs; n = 45 And n large sze enterprses: log(l/y) = log(K/Y) log(ICT/K) log(NICT/K) (0.000) (0.11) (0.72) (0.04) R 2 = 0.20 adjusted R 2 = 0.12 (*) = probablty t statstcs; n = 36 Some Implcatons The results ndcate that ICT s not a sgnfcant determnant of productvty for enterprses n n Cameroon. Consequently, any ncrease n ICT captal would decrease frms performance, as addtonal costs would just ncrease total costs wthout an ncrease n total output. Hence, frms performance would declne wth an ncrease n ICT nvestment. Ths result contradcts the man fndngs n developed countres, where ncreasng ICT nvestment contrbutes to addtonal growth of output. The stuaton mght be explaned by the fact that ICT s not well allocated among frms actvtes. Also, ICT nvestment, as many other nvestments, can have drawbacks f utlsed n non-effcent ways. Ths s the case for example when people only use the nternet for sendng e-mals to ther frends nstead of usng t to prospect for new markets. Ths can also be the case when users have lttle knowledge about the alternatve uses of ICTs. Also, t s mportant to note that as frms do nvest very lttle n tranng and sklls as well as n development, such results can be predctable. As an example, qualtatve data ndcate that about all frms (97 %) vsted were usng computers n one way or another. Accountng was the servce that utlsed computers the most (about 82 % of frms). Inventory for raw materals and fnal products occuped the second poston wth about 38 percent of frms. These actvtes however are not producng value added but do ndrectly support other actvtes by reducng tme. Producton s weakly computerzed n Cameroon s economy whle ths actvty s the man channel through whch productvty can be mproved.

14 130 Afrca Development, Vol. XXXIX, No. 4, 2014 Less than 50 percent of frms have access to the nternet. For those havng such access, about 90 percent use t for personal e-mal (not n connecton wth frms actvtes) nstead of contactng new clents or marketng new products, meanng that much producton tme s wasted on the nternet, so that the latter has a negatve mpact on producton. In fact, the nternet should be used for gatherng nformaton on new technologes, new products and new markets. Some companes have embarked on tranng ther personnel n computer sklls, but ths tranng s usually lmted to admnstratve tasks. For these reasons and many others, t s expected to get results that are close to the man fndngs of the present analyss. Another mplcaton of the fndngs of the study s that as ICT ntensty does not sgnfcantly affect labour ntensty and labour productvty, more nvestment n ICT would not lead to ether more recrutment n Cameroon s enterprses, or to a greater reducton n employment. Consequently, ICT nvestment has no mpact on the level of employment. Only non-ict captal has a postve mpact on the level of employment n Cameroon s enterprses. The level of employment would ncrease wth the captal-output rato. Ths level of employment beng the more mportant determnant of productvty growth, enterprses would beneft from ncreasng the number of employees f they want to accelerate ther output growth. Concludng Remarks Usng data from Cameroon, the analyss shows that nvestment n ICT has no mpact on productvty, as the estmated mpact of ICT nvestment on productvty s not sgnfcant. Also, ICT nvestment has no mpact on labour productvty and labour ntensty as the ICT captal rato has no sgnfcant mpact on the labour output rato. These fndngs dffer from Shymal Chowdhury (2002), who found that ICT nvestment has negatve and sgnfcant mpacts on labour productvty n East Afrca. For the sample consdered, labour remans the key determnant of value added growth n Cameroon. Ths seems to be realstc as labour s abundant n the country, leadng to relatvely low salares. Snce labour s the abundant factor, t s proftable for frms to ncrease ther producton by recrutng more unts of labour. If ICT nvestment contrbutes to rapd globalzaton of economes, t does not contrbute to productvty growth n Cameroon. One of the man reasons can be the dffuson mpact, as ICT s a relatvely recent phenomenon for enterprses n Cameroon. In fact because t can be expected that countres wth recent and low ICT penetraton (Cameroon for example) perform lower than those wth long-term, deep and rapd penetraton of ICT, the postve and non-sgnfcant mpact of ICT on productvty growth found n the case of Cameroon could become sgnfcant n the long run.

15 Nkama: An Analyss of the Impact of ICT Investment 131 One of the lmtatons of the above analyss s that the mpact of ICT on product qualty mprovements s not taken nto account. In fact, f ICT can affect productvty and labour ntensty, t s mportant to note that nformaton and communcaton technologes are mportant sources of product qualty mprovements. Another lmtaton s due to the model used and assumptons adopted. Also, as the analyss only consders a sngle year, one may get dfferent results when consderng a dfferent year. Measures of dfferent varables can also affect results. References Berndt, E.R. and Morrsson, C.J., 1995, Hgh-tech Captal Formaton and Economc Performance n US Manufacturng Industres: An Exploratory Analyss, Journal of Econometrcs, 65:9-43. Brynjolfsson, E. and Htt, L., 1996, Paradox Lost? Frm-Level Evdence of Hgh Return to Informaton Systems Spendng, posted at ccswp162 ; accessed n June Brynjolfsson, E. and Htt, L., 2000, Beyond Computaton: Informaton Technology, Organzatonal Transformaton and Busness performance, Journal of Economc Perspectves, 14: Chowdhury, S.K. and Wolf, S., 2002, Use of ICTs and Economc Performance of Small and Medum Enterprses n East Afrca, Paper presented at WIDER Conference on the New Economy n Development, Helsnk, May. Daver, F., 2002, The New Economy n Europe ( ), Paper presented at WIDER Conference on the New Economy n Development, Helsnk. Hempell, T., 2002, Does Experence Matter? Productvty Effects of ICT n the German Servce Sector, Paper presented at WIDER Conference on the New Economy n Development, Helsnk, May. Internatonal Monetary Fund, 2001, World Economc Outlook, October. Internatonal Telecommuncaton Unon, 2003, World Telecommuncaton Development Report, Geneva. Jorgensen et al., 2002, Projectng Productvty Growth: Lessons from the US Growth Resurgence, Paper presented at WIDER Conference on the New Economy n Development, Helsnk. Lal, K., 1996, Informaton Technology, Internatonal Orentaton and Performance: A Case Study of Electrcal and Electronc Goods Manufacturng Frms n Inda, Informaton Economcs and Polces, 8: Muller-Falke, D., 2001, The Use Telecommuncaton and Informaton Technologes n Small Busness Evdence from Indan Small Scale Industry, unpublshed draft. Noneman, W. and Vandhoudt, 1996, A Further Augmentaton of the Solow model and the Emprc Growth for OECD Countres, Quarterly Journal of Economcs, 110:

16 132 Afrca Development, Vol. XXXIX, No. 4, 2014 Pohjola, M., 2000, Informaton Technology and Economc Growth: A Cross- Country Analyss, UNU/WIDER Workng paper, No 173. Pohjola, M., 2002, The New Economy n Growth and Development, Paper presented at WIDER Conference on the New Economy n Development, Helsnk.