ICT Capital Spending, ICT Sector, and Firm Productivity: Evidence from Indonesian Firm-Level Data

Chaikal Nuryakin, Faisal Rachman (), Ashintya Damayati (), Nia Kurnia () and Moslem Afrizal ()
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Faisal Rachman: Institute for Economic and Social Research, Faculty of Economics, University of Indonesia
Ashintya Damayati: Institute for Economic and Social Research, Faculty of Economics, University of Indonesia
Nia Kurnia: Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta
Moslem Afrizal: Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta

No 201713, LPEM FEBUI Working Papers from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: This study examined the impact of ICT on firm productivity in Indonesia. Using unbalanced panel data of medium and large manufacturing firms, we performed two kinds of estimation. The first estimation is Cobb-Douglas production function with output as the dependent variable. Capital was grouped into non-ICT capital and ICT capital in order to determine the impact of ICT on firm’s output creation. The second estimation used total factor productivity as the dependent variable, where TFP was estimated using Levinsohn-Petrin productivity estimator. As other internal and external factors were added to the regression as control variable, the study provides early evidence that while the impact of R&D and innovation still needs to be further elaborated, ICT capital may have a positive, but not always significant, impact on firm’s production and productivity in Indonesia.

Keywords: ICT; —; Productivity; —; TFP; —; R&D; —; Innovation (search for similar items in EconPapers)
JEL-codes: D24 E22 O3 (search for similar items in EconPapers)
Date: 2017-10, Revised 2017-10
New Economics Papers: this item is included in nep-cse, nep-mac, nep-sbm, nep-sea and nep-tid
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https://lpem.org/repec/lpe/papers/WP201713.pdf First version, 2017 (application/pdf)

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