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IT And Firm-Level Performance in the Philippines, 1999–2006

  • Niño Alejandro Q. ManaloEmail author
  • Jose D. V. CamachoJR.
Article

Abstract

Information technology, or it, has become an integral part of a country’s development. Governments have provided policies to facilitate the growth of the it sectors of their respective economies, while firms have utilized it in improving their production process. This study aims to assess the economic impacts of it on the productivity of Philippine firms in terms of revenue.

Using the production function approach, secondary panel data on 50 firms for the period 2001–2004 was analyzed to measure the contributions of it capital on firm output. Results showed that it capital contributes significantly to the output of the firm and outweighs the contribution of the non-it inputs; confirming previous researches. Different panel estimation techniques were utilized in this study, where it was found that the fixed effects model (fem) is better suited to analyze the data compared to the random effects model (rem). Still, the presence of heteroskedasticity and autocorrelation justifies the use of the feasible generalized least squares (fgls) estimation, which produces the best results among all the employed panel estimations. It was further found that a firm belonging to either the finance or manufacturing sectors benefits less from using it capital, suggesting that extensive use of it capital in these sectors has led to diminishing returns over time.

it’s contributions extend beyond its tangible benefits. Quality improvements, improved technology and organization, and improvement in workers’ human capital are just some of it’s intangible elements. Given the significant effects of it’s contribution to firms’ production, the government needs to ensure a vibrant macroeconomic environment in conjunction with continuing improvements in the digital infrastructure and certain institutional reforms to ensure the continued promotion of it use in the country.

Keywords

IT Firm Behavior Firm Productivity 

JEL Classification

D21 Firm Behavior O3 Technological Change 

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Copyright information

© Japan Economic Policy Association (JEPA) 2007

Authors and Affiliations

  • Niño Alejandro Q. Manalo
    • 1
    Email author
  • Jose D. V. CamachoJR.
    • 2
  1. 1.Department of Economics College of Economics and ManagementUniversity of the Philippines Los BañosPhilippines
  2. 2.Department of Economics College of Economics and ManagementUniversity of the Philippines Los BañosPhilippines

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