ICT's Effect On Regional Performance

We are in the middle of great information revolution nowadays.ICT(Information and Communication Technology)has brought about worldwide digital dividends,improving human capital accumulation process,overall welfare as well as regional productivity and input-output links(World-Bank,2016a).Chinese government has put out multiple policies aiming at boosting digital economy.Provincial level governments have also made an effort and built up ICT infrastructure to promote research and development in ICT.A natural question to ask is that how ICT has affected regional development in China.Discussing this question can give us deeper insights into how digital economy improves regional development from a realistic perspective.Also from a theoretical perspective,it helps extend micro-level research of ICT value to regional level.Economic performance assessment refers to assessment on how efficient resources are allocated and utilized.At the regional level,resource allocation within the region and between regions both matter.As a result,when considering regional economic performance,both within region and between regional performances should be considered.In this paper,I will analyze internal economic performance as regional overall economic performance and regional industrial economic performance.Between region effects are expressed as network effect.We make use of multiple methods and data sources to measure ICT's effect on regional productivity,regional industrial productivity,regional network effect,giving a comprehensive picture of how ICT can affect regional economic performance through a variety of channels in different degree.The following is a preview of conclusions in this paper:(1)Regarding ICT's effect on overall regional productivity at a national level,ICT's effect on technical efficiency has a negative coefficient but a positive coefficient on technical progress and TFP,which shows that ICT improves TFP though promoting innovation instead of organizational efficiency or production scale.At a regional level,in the eastern provinces,ICT can improve technical progress and technical efficiency and thus TFP.In middle provinces,ICT can improve technical progress but impede technical efficiency.The two effects are similar in size,leading to small changes in TFP.In the western provinces,ICT also improves technical progress but not technical efficiency.The positive effect is larger in magnitude,thus leading to improvement in TFP.Making use of panel data and quantile regression,I empirically tested ICT's effect on productivity at different percentile.Results show that,as TFP index improves in percentile level,eastern provinces will have a larger regression coefficient but smaller coefficients in middle and western provinces,indicating that eastern provinces experienced positive self-reinforcement path,while the western and middle provinces went on a negative self-reinforcement path with declining marginal returns.The ICT diffusion level and returns to factor inputs showed a U shaped relationship with returns to factor input being at the lowest level when ICT diffusion level is in the middle level.(2)Regarding the effect on regional industrial productivity.One SD improvement in province's ICT development level and one SD improvement in task complexity can improve industrial output by 2.83 percent.Similarly,One SD improvement in province's ICT development level and one SD improvement in R&D intensity can improve industrial output by 9.79 percent.There are five sub-indexes in the ICT development level index,each of which have a positive impact on industrial output.The impact of ICT industrial index is stronger than the other four indexes.ICT development can also improve workers' wage level and employment level,but the impact is weakly negative for high complexity industry,which is consistent with theories in skill-biased technological change.?ICT can improve resource allocation efficiency.More specifically,it can lower capital allocation distort in high complexity industries and labor allocation distort in R&D intensive industries.(3)Regarding ICT's effect on regional network effect.?Inter provincial economic linkages are divided into eight areas.In comparison,Intra provincial linkages are much tighter.?Inter provincial ICT development similarity can promote economic integration significantly,with one SD improvement in development level similarity increasing economic integration level by 0.056-0.014 SD.Provincial ICT intensity can industrial development level are two major determinants.?ICT can also improve province structure hole attribute score,showing that provinces with higher ict development level is at the center of communication networkThe major contributions of this paper are as follows:(1)Using the framework of decomposing TFP,ICT's effect on economic performance is extensively studied.Many methods are used to measure and decompose TFP such as DEA Malmquist index decomposition,Tobit panel regression etc.In addition,Stochastic Frontier Analysis and maximum likelihood are used to study ICT's impact on technical efficiency and scale efficiency.From a empirical point of view,decomposition of TFP is extensively studied.From a x theoretical point of view ICT's coefficient on scale efficiency can be a new perspective to explain the "Solow Paradox".(2)From the perspective of comparative advantage,ICT's effect on regional productivity is studied.Making use of Industrial survey of Chinese enterprises,I collapse data to province-industry-year level and combine the dataset with NBER-CES?unstats,BLS,Orbis dataset to get regression dataset.Based on this,ICT's development level on regional industrial productivities are studied.The contribution is that technical side of ICT is emphasized and illustrated through the perspective of comparative advantage.The same goes for how natural endowment can be a source of comparative advantage in agriculture times and population in industrial times.(3)Regarding ICT's effect on regional network effect.From a theoretical and methodological point of view,most current research on regional network effect and spillover effect are based on spatial economies and spatial econometrics.This paper contributes to previous literature by using social network analysis to study regional economic linkages.Though there are few researches on using social network analysis on regional economies studies,they are limited to describe structures and changes in regional network without studying factors affecting the network.For example,Leng et al(2011)and Zhang(2017).This paper make use of social network stucture to describe regional network and use QAP method to study how ICT affects regional network,showing a more comprehesive and systematic way to sutdy ICT's effect on regional economic performance.