Effects of ICTs on Labor Productivity: A Re-examination of Solow’s Paradox Through the Prism of the Joint Use of ICT Tools in Cameroonian Firms

Abstract

This paper re-examines Solow’s productivity paradox through the prism of the joint use of ICT tools. On the one hand, the joint use of ICT tools implies heterogeneous, hierarchical, and complementary skills and, on the other hand, constitutes a larger consumption network. This study uses data from the enterprise survey conducted by the World Bank on a representative sample of 361 Cameroonian firms to re-examine this productivity paradox. These data have the advantage of providing information on the characteristics and productivity of firms, as well as on the different types of ICT used. Methodologically, the study uses a Tobit model with instrumental variables to take account of ICT endogeneity problems and the truncated, censored nature of our productivity measure. The main results suggest that (i) the use of a single ICT tool (mobile money, website, or email) has a positive but insignificant effect on worker productivity; (ii) the use of two or more of these tools (email-mobile money, email-website, mobile money-email-website) positively and significantly affects worker productivity, by 5.881, 6.189, and 8.881 points, respectively; (iii) company size, sector of activity, and previous productivity positively and significantly affect labor productivity. This study argues in favor of the joint use of ICT tools requiring different, complementary, and prioritized skills in order to significantly increase productivity. Specifically, it is in the interests of large companies and companies in the industrial and service sectors to mobilize several ICT tools requiring complementary skills.