The Impact of ICT on the Information Economy

The information and communications technology (ICT) is the lifeblood of the information economy, as guarantee of sustainable economic growth and especially as a driver of productivity growth. Information technology has the potential to transform entire industries, so in this paper, the research emphasizes on the impact of ICT on the information economy at the industry level. Firstly, through analysis of ICT industry´s contribution to GDP, we assess how ICT industry affects information economy. Secondly, we analyze the importance of ICT and the substitutability between ICT and the traditional production factors (capital and labor) with improved Cobb-Douglas function. We utilize the proposed method to Shanghai ICT, which provides solid support of positive ICT contributions to the information economy.