Innovation in ICT to boost economic productivity

IBM signals Australia needs to invest in smart systems
ICT investment could be the key to boosting productivity growth

ICT investment could be the key to boosting productivity growth

New research has flagged ICT investment a key to boosting productivity growth in the face of the economic downturn.

The research, commissioned by IBM and conducted by Access Economics, revealed microeconomic policy and advancements in technology as two main paths towards boosting economic productivity.

According to principal and director of Access Economics, Dr Ric Simes, a considerable amount of research had been conducted in Australia since the 1990s around what drives productivity growth.

“While there are differences of detail in the various research, a strong, overriding message emerges that is combining economic reform and innovation in, and adoption of, new technologies provides the greatest scope to improve productivity throughout the economy,” he said.

Simes said advancements in ICT over the years had influenced economic productivity in three ways: Technology producing more cost-effective solutions; user benefits from the increased range of ICT services; and decreased costs, along with the ability to improve an organisation’s capital, skills and labour.

He outlined five areas in the economy that stood to benefit from adopting improved technology including water, energy, wholesale and retail trade, transport and communications.

“The most significant issue in terms of communications on the policy table today is the rollout of high-speed broadband. In recent years, Australia has failed to develop an effective regulatory regime to encourage investment in the core infrastructure for the system,” Simes said.

“Of course, considerable investments have been undertaken in parts of the system. For example, in densely populated parts of our cities or in mobile technologies, but the benefits from a high-speed broadband that is enjoyed by a large majority of the community remains some way off.”

IBM general manager, Glen Boreham, said there was a need to build a digital infrastructure to make Australian systems smarter including the broadband network, economic system, energy grids, traffic systems and water distribution networks.

“The Federal Government’s economic stimulus package is focused on fixing physical, traditional infrastructure – our roads and rail systems. This is all well and good, but we need to do the same for our digital infrastructure,” he said. “We may be finally building a broadband network, but we are not investing enough in the devices that will allow Australians to get value from that network, we are not making it smart.”

Boreham said inefficiencies in utilities and transport were hampering productivity growth. The research found that since 2004, Australia’s productivity growth had been below average and dipped by 1 per cent.

“These inefficiencies are a constant and growing drain on our economic performance. Inefficient systems are pouring away billions of dollars of our precious resources,” he said. “This is no time for bandaid solutions to our economic problems, we need systemic change that will prepare Australia to compete and win in the digital economy.”

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More about: Access Economics, IBM, Speed
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