Impact of ICT and innovation on industrial productivity in Uruguay
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Innovation is a productive process which relies on human resources and investment in capital assets procurement, machinery and/or equipments intended for technological development and innovation activities. If the production function at the microeconomic level is the relationship between productive factors and output, capital allocated to ICT can be taken as another productive factor, in the same way as capital, work and human capital. The relative ease of access to ICT, due to their fast price reduction and quality increase, and to the fact that they are considered general purpose technologies, have led various scholars to propose that ICT, due to their effect on cost reductions of coordination among individuals and firms, may produce a change in firm structure. Likewise, innovation also has an effect on productivity, mainly through total factor productivity but also by interacting with other factors such as capital or human capital. This innovation refers to technologically new processes and products, either at firm, local, country or global level. The emphasis on novelty does not mean to make more of the same, but to expand human knowledge frontier, observing that what is novel may also be applied at firm or country level. Therefore, when we speak about innovation, we must understand that what is new for a particular country may not be new at international level.
The characteristics of Uruguayan economy determine that firm innovation behavior has specific features that are different from empirical evidence related to developed countries. The main objective of this paper is to analyze the effects of ICT and innovation on productivity in manufacturing firms in Uruguay. We are also interested in finding out if firm’s employees vary in quantity and quality in relation to the level of ICT investment and innovation. This study is organized as follows. Section 2 presents a brief literature review, and Section 3 describes the methodological and empirical approach. Section 4 shows the main features of innovation activities in Uruguay. Finally, Section 5 discusses econometric results and Section 6 concludes.
This document is part of ICT in Latin America. A microdata analysis / Mariana Balboni, Sebastián Rovira and Sebastián Vergara, editors. CEPAL (2011)
