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Confronting the Crisis

ICT Stimulus Plans for Economic Growth. Second edition, October 2009

image of Confronting the Crisis

This Report examines the scope for public financing and the role that the ICT sector and economic stimulus plans can play in regenerating economic growth and promoting economic recovery. More than fifty countries have launched economic stimulus plans in an effort to boost aggregate demand (Insight 4) – the OECD records as many as 25 OECD countries as having announced stimulus plans, while major emerging and transition countries including Brazil, Chile, China and the Russian Federation have also launched similar initiatives to stimulate their economies. Investments in ICT can play a strong role in generating long-term economic growth, as they offer strong multiplier effects in returns on investment, strong externalities and reduced economic leakages (Section 3.1). These strong externalities to ICT infrastructure suggest that the social returns on investment in ICTs are likely to exceed the private returns significantly, implying that private sector activity alone is unlikely to generate socially optimal levels of investment.

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Executive Summary

The financial crisis that erupted a year ago has shaken the global financial sector to its foundations and sent the economies of many industrialized countries spinning into recession, while slowing the growth of major emerging markets. The size and scale of the global economic slowdown have proved staggering (Insight 1). Stock markets have recently recovered ground off recent lows and economists are finding cause for optimism, but economic analysts at leading institutions such as the IMF, World Bank and OECD are virtually united in their agreement that the recovery will be weak, slow and uneven. Global unemployment is rising fast and promises to persist, well after economic recovery finally starts.

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