Empirical analysis for Korean manufacturing firm's IT investment effect to economic performance

As implied by the terms of IT productivity paradox, measuring the information technology contribution to economic performance has been one of the challenging issues to both policy makers and business professionals. As such, diverse attempts with sophisticated analyses have been reported in the literature to analyze the effect of IT contributions. In this paper, we follow Growth Accounting Method to measure the IT contribution effect to manufacturing firm's economic performance in Korea. Various regression methods and statistical analyses are applied with fourteen years of industry panel data. Using the Cobb–Douglas function, time lag analysis is made to understand IT effect to economic growth, instead of capturing data from individual firm, industry level data from the National Statistics Bureau is used for IT capital, non-IT capital, and so on. Statistical analysis following the panel unit test and panel co-integration test was performed to reveal the exact effect of IT contribution to economic performance. Empirical testing results for non-stationary nature of IT investment effect are reported as well as IT contribution to manufacturing industry's economic performance.