RECENT OECD WORK IN MEASURING THE INFORMATION SOCIETY

1
RECENT OECD WORK IN MEASURING THE INFORMATION
SOCIETY
Lisbon, 12 September 2008

• Martin Schaaper
• OECD
• Directorate for Science, Technology and Industry
• Economic Analysis and Statistics Division

2
This presentation

• The Lisbon Manual
• The OECD Guide to Measuring the Information
  Society
• Revisions to the classifications
• Impacts

3
The Lisbon Manual
4
Possible confusion?

• OECD Guide to Measuring the Information Society
• Eurostat Methodological Manual
• Partnership Core Indicators
• ? How does the Lisbon Manual fit?

5
OECD GUIDE TO MEASURING THE INFORMATION SOCIETY
6
Introduction

• OECDs Working Party on Indicators for the
  Information Society (WPIIS) active since 1997
• Its brief was to establish a set of definitions
  and methodologies to facilitate the compilation
  of internationally comparable data for measuring
  various aspects of the information society, the
  information economy and electronic commerce

7
What is the Guide to Measuring the Information
Society?

• The Guide brings together the work of WPIIS as a
  compilation of concepts, definitions,
  classifications and methods for Information
  Society measurement.
• It was first released at the end of 2005, a
  revised version was published in 2007
• The Guide is based on WPIIS work
• but also includes statistical work on IS
  statistics from other areas of OECD and
• general information about the activities of
  member and non-member countries, other
  organisations.

8
Audience for the Guide

• Official statisticians measuring the Information
  Society
• from member and non-member countries
• Analysts who interpret their statistical output
• Other users
• policymakers
• businesses
• researchers
• international organisations.

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Objectives of the Guide

• Help to consolidate Information Society
  measurement in OECD member countries.
• Share best practice with newly participating
  countries.
• Assist those countries to start or extend develop
  measurement programs in this area.

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Scope of the Guide

• The Guide details the statistical standards
  developed by the WPIIS
• but is somewhat broader than that.
• It follows a broad conceptual view of the
  Information Society and includes
• work in progress
• work being done elsewhere in the OECD and outside
  the OECD.
• The Guide deals primarily with official
  statistics.

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Content chapters

• WPIIS and other OECD work
• ICT products
• ICT infrastructure
• ICT supply (the ICT sector) and ICT patents
• ICT demand
• Electronic commerce and electronic business
• Electronic content
• Cross-cutting topics
• Impacts of ICT.
• The Guide concludes with a road ahead chapter.

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Content annexes (1)

• Annex 1 finalised standards
• Annex 1a OECD classification of ICT goods
• Annex 1b OECD definition of the ICT sector
• Annex 1c OECD model survey of ICT use by
  businesses
• Annex 1d OECD model survey of ICT access and use
  by households and individuals
• Annex 1e OECD definitions of Internet and
  e-commerce transactions.
• Annex 2 covers OECD output on the Information
  Society, with links to statistical releases.

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Annexes (2)

• Annex 3 presents ICT statistics metadata of OECD
  member countries
• see. http//www.oecd.org/sti/ictmetadata
• Annex 4 non-member activities
• Annex 5 perspective of non-OECD countries.
• Its aim is to facilitate applicability of the
  Guide to those countries, thus improving
  prospects for internationally comparable data in
  this area.

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Completion of the revisionand the future

• The revision is not complete yet, because the
  work on ICT and Content and media sector products
  classifications has not yet been finalised.
• Changes associated with that work will be applied
  later in the year once the products work is
  completed.
• Revisions in future years could include
• a complete revision of Chapter 8 (cross-cutting
  topics) to revise existing sections and include
  new work
• more extensive revisions to the ICT use chapters
  and annexes
• incorporation of more recent work on ICT impacts
  by OECD and member countries.

15
New Classifications based on ISIC Rev. 4 and CPC
Ver. 2

• ICT Sector and Products

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OECD information economy sectoral and product
definitions
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The ICT sector Classification
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Original guiding principles (1)

• ICT definition main guiding principles
• 1a) For manufacturing industries, the products
  (goods) of a candidate industry must
• fulfil the function of information processing and
  communication including transmission and display,
• or
• - use electronic processing to detect, measure
  and/or record physical phenomena or control a
  physical process.

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Original guiding principles (2)

• 1b) For services industries, the products
  (services) of a candidate industry must be
  intended to enable the function of information
  processing and communication by electronic means.

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2007 revision

• Revision of the guiding principle for ICT
  manufacturing
• The products of a candidate manufacturing
  industry must be intended to primarily fulfil the
  function of electronic information processing and
  communication (including transmission, recording,
  storage and display). This includes also
  production of electronic components
• From a broader to a narrower definition of ICT
• Integration of the content and media sector into
  the model

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ISIC Rev. 3.1 ICT sector codes (1)

• Manufacturing
• - 3000 Office, accounting and computing machinery
• - 3130 Insulated wire and cable
• - 3210 Electronic valves and tubes and other
  electronic components
• - 3220 TV and radio transmitters and app.tus for
  line telephony and line telegraphy
• - 3230 Television and radio receivers, sound or
  video recording, etc.
• - 3312 Instruments and appliances for measuring,
  checking, testing, navigating
• - 3313 Industrial process equipment

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ISIC Rev. 3.1 ICT sector codes (2)

• Services
• - 5151 Wholesale of computers, computer
  peripheral equipment and software
• - 5152 Wholesale of electronic and
  telecommunications parts and equipment
• - 6420  Telecommunications
• - 7123 Renting of office machinery and equipment
  (including computers)
• - 72 Computer and related activities

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ICT sector Goods and goods related industries
(ISIC rev. 4)

• ICT manufacturing industries
• 2610 Manufacture of electronic components
• 2620 Manufacture of computers and peripheral
  equipment
• 2630 Manufacture of communication equipment
• 2640 Manufacture of consumer electronics
• 2680 Manufacture of magnetic and optical media
• ICT trade industries
• 4651 Wholesale of computers, computer peripheral
  equipment and software
• 4652 Wholesale of electronic and
  telecommunication equipment and parts

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ICT sector Serviceindustries (ISIC rev. 4) (1)

• 5820 Software publishing
• 61 Telecommunications
• 6110 Wired telecommunications activities
• 6120 Wireless telecommunications activities
• 6130 Satellite telecommunications activities
• 6190 Other telecommunications activities
• 62 Computer programming, consultancy and related
  activities
• Computer programming activities
• 6202 Information technology consultancy
  activities and computer facilities management
  activities
• 6209 Other information technology and computer
  service activities

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ICT sector Service industries (ISIC rev. 4) (2)

• 631 Data processing, hosting and related
  activities web portals
• 6311 Data processing, hosting and related
  activities
• 6312 Web portals
• 951 Repair of computers and communication
  equipment
• 9511 Repair of computers and peripheral equipment
• 9512 Repair of communication equipment

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Content and media sector

• A content product corresponds to an organised
  message intended for human beings published in
  mass communication media.
• The value of such product to the consumer does
  not lie in its tangible qualities but in its
  information, educational, cultural or
  entertainment content.
• The content sector is the group of economic
  activities that are primarily engaged in the
  publishing and/or the electronic distribution of
  content products
• Publishing activities
• Motion picture, video and television programme
  production
• Broadcasting and programming activities
• Other information service activities

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Content and media sector

• Guiding principles
• It is an organized message intended for human
  beings.
• It results from an organized production activity.
• It is combined with, or carried by, a medium.
• Its diffusion is not restricted to a list of
  privileged recipients.
• Its diffusion requires a communication medium,
  i.e. a mass diffusion medium.
• Its diffusion requires the intervention of a
  publisher that is of a publishing business.

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Content and media sector(ISIC Rev. 4) (1)

• 581 Publishing of books, periodicals and other
  publishing activities
• 5811 Book publishing
• 5812 Publishing of directories and mailing lists
• 5813 Publishing of newspapers, journals and
  periodicals
• 5819 Other publishing activities
• 591 Motion picture, video and television
  programme activities
• 5911 Motion picture, video and television
  programme production activities
• Motion picture, video and television programme
  post-production activities
• 5913 Motion picture, video and television
  programme distribution activities
• 5914 Motion picture projection activities

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Content and media sector(ISIC Rev. 4) (2)

• 592 Sound recording and music publishing
  activities
• 60 Broadcasting and programming activities
• 601 Radio broadcasting
• 602 Television broadcasting and subscription
  programming
• 632 Other information service activities
• 6321 News agency activities
• 6329 Other information service activities n.e.c.

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Implementation issues

• When?
• For which reference period?
• Should we consider back casting?
• Should we revisit the existing definition (ISIC
  3.1) to better align it on the new definition?

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2007 RevisionICT products and content and media
products
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Guiding principles

• Guiding principles for the ICT and Content and
  media products are adapted from guiding
  principles for the sector definitions.
• ICT products must primarily be intended to fulfil
  or enable the function of information processing
  and communication by electronic means, including
  transmission and display.
• Content corresponds to an organised message
  intended for human beings published in mass
  communication media and related media activities.
• The value of such a product to the consumer does
  not lie in its tangible qualities but in its
  information, educational, cultural or
  entertainment content.

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Broad level categories for ICT products (CPC Ver.
2)
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Broad level categories for Content and media
products (CPC Ver. 2)
35
Implementation of the CPC and HS

• A small survey of OECD countries indicates that a
  few countries expect to introduce the revised CPC
  (or national equivalent) to their NSS in the next
  1-3 years. However, others appear to have no such
  plans.
• HS2007 is already being used for trade statistics
  by a number of countries.
• Correspondence HS2007-CPC Ver.2
• this would be based on the work of the UNSD which
  is constructing such a correspondence.

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Impacts
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It is difficult to measure ICT impacts because

• Many types of impacts e.g. short/long term and
  they are difficult to isolate.
• The impact of any factor is difficult to show
  because a positive correlation cannot readily be
  attributed to a cause-and-effect relationship.
• ICT is an enabling/general purpose technology so
  it is not ICT per se but how it is used which
  leads to the impact.
• There are a number of measurement issues relating
  to ICT specifically e.g. treatment of software,
  classifications, price deflators.

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Economic impacts
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Measuring the economic impacts of ICT (1)

• OECDs Growth Project (2001) ICT plays three
  roles
• through capital deepening, as ICT is an important
  asset in overall business investment
• through multi-factor productivity growth in the
  production of ICT products
• through MFP growth due to the use of ICT, through
  efficiency gains in individual firms, or through
  network/spillover effects from its use.

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Measuring the economic impacts of ICT (2)

• Macro-economic analysis (OECD)
• Sectoral contribution (ICT producing and using
  sectors) (OECD).
• Firm-level evidence (OECD, Eurostat, various
  NSOs)
• current Eurostat project to identify how ICT
  adoption affects business performance by linking
  firm level data (micro-data) from different
  statistical sources
• a strength is the common approach across the EC,
  with one NSO (UK) leading the project.

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Measuring the economic impacts of ICT (3)

• Subjective (perceptions) approach (OECD,
  Eurostat, Australia)
• The 2005 OECD model survey included a question on
  business perceptions of the benefits of Internet
  selling.
• Eurostat has a question on improvements
  attributable to ICT projects in its 2008 business
  use questionnaire.
• Such questions provide a direct measure but are
  sometimes criticised for their subjectivity.

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Analysing interactions

• Within firms
• between ICT and complementary investments
• Among firms
• ICT-enabled networks
• Spillovers
• e-business
• Between firms and the market
• competition
• e-commerce
• Among industries
• between ICT-producing and ICT-using industries
• Among technologies
• ICT-driven innovation

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What we produce

• ICT as a product innovation

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ICT and Growth

• ICTs area major driver of GVA growth in OECD
• ICT sectors have been growing faster than non-ICT
• ICT services even faster
• Particularly computer related services
• Similar trend for employment growth

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ICT and Growth

• ICT sector feeds growth through 3 channels
• Final demand ICT offers new goods and services
  for consumers
• Demand multiplier ICT increases demand for the
  output of other industries
• Supply multiplier ICT creates new opportunities
  for the supply to other industries.

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ICT channels to growth
2001-2006

• Final demand had the largest impact over ½ of
  ICT total contribution
• Largest in Belgium, UK, Netherlands and Austria
• Forward linkages largest in France, Germany, UK
  and US
• Backward linkages smallest in Belgium and UK

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Final demand

• Communications have been the fastest-growing
  household expenditure item since 1995
• ICT services have been the fast-growing category
  in trade in services

48
Final demand

• Propensity to consume ICT differs among
  countries
• Share of households ICT expenditures in
  OECD countries, 2005

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Final demand

• Propensity to consume ICT differs among
  households

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ICT contribution to growth

• Compare
• actual growth rate of total output
• the growth rate that would have occurred if no
  ICT output was produced.
• Ex Finland

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ICT contribution to growth1995-2000

• Largest in Finland, US, Sweden
• Large also in UK and Netherlands
• Small in Germany and Italy

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ICT contribution to growth2001-2006

• Largest in UK, Finland and Sweden
• Large also in US and Belgium
• Small in France and Italy

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ICT demand multipliers

• In 2000 1 of ICT demand increased total output
  by 1.27 in Japan

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(No Transcript)
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ICT demand multipliers
In 2006, largest demand multiplier in Sweden
(1.24) and Finland (1.23), Denmark and US
(1.21). Belgium and UK the lowest (1.13)
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ICT supply multipliers

• In 1995 1 of ICT output increased total output
  by 1.32 in France

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ICT supply multipliers
In 2006, largest supply multipliers in France
(1.30), Germany (1.29), US (1.26), UK and Italy
(1.25). Belgium, Finland and Netherlands the
lowest (1.21)
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ICT contribution by sector

• 4 ICT industries accounted for over 85 of the
  total ICT impact Wholesale of machinery, equip
  (29),
• Telecommunications (24), Computer rel. (22)
• Radio, television communication equip (13).

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ICT contribution by sector

• From 95-00 to 01-06
• Wholesale of machinery, equip stable,
• Telecommunications (3), Computer rel. (2)
• Radio, television communication equip (-6).

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Conclusions

• ICT backward forward linkages are large in
  1995-2006, 1 ICT output increased total output
  by 1.33 to 1.49
• ICT contribution to growth is substantial on
  average, ICT accounted for 2.4 percentage points
  a year of the total output growth in 1995-2000
  2.1 percentage points a year in 2001-2006.
• 4 ICT industries accounted for over 85 of the
  total Wholesale of machinery, Telecommunications,
  Computer related activities, and Radio,
  television comm.
• The contribution of ICT industries varies across
  countries.

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Further research

• To extend the framework to a larger number of
  OECD and non-OECD countries
• To separate the contribution of ICT exports via
  backward linkages and ICT imports via forward
  linkages.
• To bring sectoral investment flows into the
  analysis.

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How we produce

• ICT as a process innovation

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ICT and Productivity

• Solows paradox / large TFP
• Progress in measurement
• OECD Hedonic prices, Capital services,
  Software, Output in services, STAN Database,
  Productivity database
• The Economic Impact of ICT Measurement,
  Evidence and Implications (2004)
• ICT investments account for a significant part
  of GDP growth
• ICT investments contribute to MFP growth
• ICT producing sectors raise overall
  productivity
• ICT services increase productivity in using
  sectors
• ICT other factors have stronger effects at the
  firm level

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ICT and Productivity

• ICT investment matters more than non-ICT
• but MFP growth remains the main driver
• ICT investment has no impact on MFP growth since
  1995(Van Ark, 2007)

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What explains large MFP?

• 3 explanations
• What we measure is still badly measured
• Capital services, hedonic prices, poor industry
  data
• We fails to measure complementary investments
• Organisational changes (Oulton Srinivasan, 2005)
• We fails to measure intangibles
• Van Ark (2004), McGrattan and Prescott (2005),
  Corrado, Hulten, and Sichel (2005 2006) Fukao
  et al. (2007)

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Intangibles The Knowledge Capital of the Firm
Source Marrano, Haskel and Wallis based on
Corrado, Hulten Sichel
67
How important are intangibles?

• Intangibles explain a large part of MFP
• Significant impact also in the UK and Japan

USA
68
ICT as a GPT

• Organisational changes, skills, innovation,
  business models, intangibles are complementary to
  ICT
• ICT creates opportunities to change organisation,
  improve skills, speed up innovation and invest in
  intangibles
• Intangibles are endogenous!

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ICT and Innovation

• ICT-related patents
• 35 of OECD PCT filings in 2005
• over 50 in Singapore and Finland
• more than doubled in China over 1996-2005

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Patterns and Trends
Innovation in non-ICT sectors (patents) depends
on innovation inputs from ICT (citations of ICT
patents)

• The share of ICT citations in total citations in
  OECD has increased by 7.5 percentage points, from
  16.7 in 1985-89 to 24.2 in 2000-05

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ICT Citations

• The weight of ICT citations is the largest in ICT
  industries
• However, ICT citations account for a large share
  of total citations also in some non-ICT
  industries

2000-05
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Firm-level studies some findings (1)

• Firm level studies suggest that use of ICT has
  positive impacts on firm performance and
  productivity, but
• benefits occur primarily/only when accompanied by
  other changes and investments and impact differs
  by firm size and age etc.

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Firm-level studies some findings (2)

• Firm level results for the UK include positive
  productivity effects from hardware and software
  investment, especially in services and
• use of IT by employees confers a significant
  additional productivity impact
• the effects on labour productivity are
  substantially higher where employees are
  broadband-enabled.

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Measuring

• Intangibles
• Organisation
• Firm-networks
• e-business
• Hedonic prices
• Industry-level data
• Services output
• RD

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Social impacts
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Measuring social impacts

• Has received less attention from official
  statisticians than economic impacts.
• But questions on ICT are appearing increasingly
  in social surveys, including those based on the
  OECDs model surveys.
• Surveys are revealing that ICT is changing how
  people do many things, including
• how and where they work and what jobs they do
• how they do everyday activities such as shopping,
  banking, and dealing with government
• how they spend their income and their time
• how they relate to family and community.

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Challenges of measuringsocial impacts of ICT (1)

• For economic impacts, arguably the ultimate
  questions of micro- and macro-economic impact are
  being addressed
• and are reasonably measurable.
• The ultimate questions in respect of society are
  less well defined and likely to be harder to
  measure.

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Challenges of measuringsocial impacts of ICT (2)

• For instance, how can a question like Is ICT, on
  balance, beneficial for this society? be
  addressed statistically?
• more subjective and multi-faceted than questions
  about economic growth.
• Statistics on social impacts of ICT tend to be of
  an intermediate nature e.g. impact on patterns of
  work rather than whether this has a positive or
  negative outcome for individuals or the broader
  society.

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Social impacts recent measurement approaches (1)

• Use of labour force statistics to analyse changes
  in employment of ICT-skilled personnel by
  industry (OECD). Skills are at two levels
• narrow ICT specialists who have the ability to
  develop, operate and maintain ICT systems and for
  whom ICT is the main part of their job
• broad includes ICT specialists as well as basic
  and advanced ICT users for whom ICT is a tool for
  their job.

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Social impacts recent measurement approaches (2)

• Use of labour force surveys to measure telework
  (UK)
• teleworkers are defined as those who work mainly
  from home (or using home as a base) who were only
  able to do so because they used both a telephone
  and a computer.
• Household expenditure surveys to measure changing
  expenditure patterns (several countries).

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Social impacts recent measurement approaches (3)

• Time use surveys measuring the impact of ICT on
  how people spend their time (UK, Australia)
• the surveys recognise technology in two ways as
  a means of doing an activity and use as a
  distinct activity.
• E-Crime e.g. questions in model surveys on the
  impact of malware (OECD, Eurostat)
• but e-crime classifications are lacking.

82
Social impacts recent measurement approaches (4)

• Surveys measuring education impacts (OECD PISA
  studies).
• Role of ICT in social capital (Australia,
  Finland)
• OECD defines social capital as networks
  together with shared norms, values and
  understandings that facilitate co-operation
  within and among groups.
• Finland has analysed the relationship between
  social capital and ICT use.

83
Social impacts recent measurement approaches (5)

• Retrospective examination of predicted impacts of
  ICT to see whether they have occurred (Canada).
• Perceptions questions in household surveys
  (limited in NSOs, more likely in other
  organisations)
• it is possible that perceptions measures of the
  impact of ICT will be more reliable for
  individuals than for businesses.

84
Social impacts of ICT findings (1)

• ICT is affecting where people work and what jobs
  they do
• In OECD countries, in 2004, 20 30 of
  employees were either ICT specialists or ICT
  users.
• In 2005, 2.1m people in the UK (7 of the
  workforce) working mainly from home, or using
  home as a base, were only able to do so because
  they used both a telephone and a computer.

85
Social impacts of ICT findings (2)

• People are spending more of their income on ICT
  products
• In Canada, average household spending on ICT
  increased from 4.2 to 4.5 of spending between
  1997 and 2003 despite falling ICT costs.

86
Social impacts of ICT findings (3)

• ICT is changing how people spend their time
• UK growth from 20002005 in the time spent by
  adults using computers (outside work) from 96
  to 120 minutes a day and UK computer users
  spend less time on average on activities such as
  housework, watching TV, social life, resting and
  studying.

87
Social impacts of ICT findings (4)

• Impact of ICT on educational outcomes (2003 PISA)
• The maths performance of students without access
  to computers at home was significantly below that
  of those with home access and, in most countries,
  a performance advantage persisted even after
  accounting for different socio-economic
  backgrounds.

88
Social impacts of ICT findings (5)

• Statistics Finland found significant correlations
  between ICT use and components of social capital
  in 2004, with the most significant being with
  community involvement (participation in voluntary
  or leisure activities).

89
Social impacts of ICT findings (6)

• Some of the predicted impacts of ICT which are
  not occurring (Stats Canada, 2006)
• Reduction of physical mail. While communication
  by ICTs (in the form of email, text messages etc)
  is increasing greatly, in Canada, physical mail
  is also increasing (though more slowly).
• Domination of Internet retail selling. E-tailing
  in Canada is growing fast but is still very
  small normal retailing is also growing.

90
Web resources

• OECD Measuring the Info-economy home page
  http//www.oecd.org/sti/measuring-infoeconomy
• OECD Guide to Measuring the Information Society
  http//www.oecd.org/sti/measuring-infoeconomy/guid
  e
• OECD Key ICT Indicators www.oecd.org/sti/ICTindic
  ators
• OECD Science, Technology and Industry Scoreboard
  http//www.oecd.org/sti/scoreboard and
  www.sourceoecd.org/scoreboard

91
THANK YOU!

• martin.schaaper_at_oecd.org