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Confronting the Crisis

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

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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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Impact of the Financial Crisis

The ICT sector is now a sizeable and growing sector in many countries, typically accounting for up to 7.5% of GDP worldwide (depending on its definition) and an even higher proportion of GDP growth. Historically, the ICT industry has been viewed as a volatile, but resilient long-term growth industry riding a wave of innovation, even during difficult economic times. Today, there is clear evidence that the ICT industry is sharing the pain of the global recession with widespread lay-offs and restructuring – however, the financial crisis has had a markedly different impact on the individual technologies and it is difficult to speak of the overall general experience of the industry without allowing for the widely different experience of different sectors.

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