The Impact of ICT Capital on Firm Output and Productivity: Evidence for Ecuadorian firms

We estimate the effects of ICT capital and ICT use on firm output and total factor productivity in Ecuador, using a capital augmented production function. We study heterogeneities across 2 dimensions: (i) economic sectors and (ii) firm characteristics (size, export orientation, age, location, technological intensity, and knowledge intensity). Using a novel and comprehensive data set of 27,489 Ecuadorian formal firms and using 2 identification strategies, we find positive and statistically significant effects of ICT capital and ICT use on output and TFP across economic sectors, controlling for firm characteristics. For robustness, we use four alternative measures of (i) ICT capital intensity and (ii) ICT use by the firm, finding, for the former, interesting industry differences on the effect of ICT capital and, for the latter, a positive effect of digital training on firms TFP.