Information and Communication Technology (ICT) and Singapore’s Economic Growth

Article Source: Journal of Information Economics and Policy, Vol. 25, No. 4, pp. 284–300, 2013
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This study reviewed Singapore’s economic growth from 1990-2008. Investment in Information and Communications Technology (ICT) lead to growth of average labor productivity (ALP) and gross domestic product (GDP) growth. ICT investment in became more important over time, while as the importance of ICT manufacturing declined.


Policy Relevance:

Governments should foster ICT use. Diffusion of ICT through the economy is more important than ICT production.


Key Takeaways:
  • The period from 1990-2008 includes times of high growth, and several severe economic shocks.
  • ICT includes computer hardware, software, and telecommunications equipment.
  • Investment in ICT played a large role in Singapore’s growth from 1990-2008.
    • Investment in ICT added 1% to the growth of GDP and .8% to growth of ALP.
    • The overall growth rate of Singapore’s GDP varied from 8.1% to 4.0%.
  • Over time, the importance of investment in ITC grew significantly.
    • ICT contributed a 22% share from 1990-1996, 31% from 1996-2002, and 33% from 2002-2008.
    • ICT contributed 29%, 30%, and 100% to ALP during each of the three sub-periods.
  • Singapore’s government promoted the manufacture of ICT products such as semiconductors and consumer electronics, which played a modest role in growth.
    • ICT manufacturing contributed 0.29% to GDP growth and 0.41% to ALP growth.
    • ICT manufacturing contributed less over time.
    • Throughout the study period, the important of manufacturing was much higher in Singapore than in the OECD countries.
  • National governments play a critical role in fostering ICT adoption.
  • The production of ICT will not necessarily contribute to a nation’s growth.
    • Nations should focus on IT diffusion, not manufacturing.
    • The region may become trapped in low-margin electronics manufacturing ventures, and not move into more profitable IT-based service sectors.



Vu Minh Khuong

About Khuong Minh Vu

Khuong Minh Vu is an Associate Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore. His research and teaching concentrate on economic development and policy analysis.