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European Telework Online Computers and Economic Success: evidence for a strong correlation The free of charge provision of these resources is made possible by our sponsors: The chart below uses dat from the EITO Report, 2001 edition, and World Bank statistics. EITO (The European IT Observatory) has since 1994 been the most consistent and reliable data series tracking ICT investment and use across Europe and in Europe compared with other world regions. The latest edition of the EITO Reports, EITO 2001, is now available - in Book and CD formats. Click here for details, including a table of contents, or click here for some further examples of data from the EITO Reports. (Click here or in the graph for a larger, more readable version) Commentary The data For many years, sceptics have questioned the value of IT investment. Does it really yield productivity growth and cost savings for the individual company? Does it yield economic growth and prosperity at the national or regional level? Recent analysis of eight-year trends in relative IT investment and relative prosperity between Europe and the USA shows a very strong correlation between IT investment and prosperity (see "The e-commerce investment gap: Europe-USA eight year comparisons", http://www.eto.org.uk/eustats/graphs/93-99.htm). The chart below plots a single year (1999 IT investment levels, reported in EITO 2001), showing the correlation between spending on IT (computers, software etc) in European countries, USA and Japan) against Gross Domestic Product (GDP). To provide realistic comparisons, IT investment is shown as a percentage of national GDP, while GDP per capita shows relative wealth. Strength of correlation The boundary lines show a very tight correlation between the two. Countries that spend a higher proportion of their income on IT have a higher level of income than countries that spend relative less on IT. Interpretation Such a correlation doesn't prove any cause-and-effect linkage between the two items. However it does very strongly suggest such a linkage. This is especially the case when taken in conjunction with the consistency of a similar correlation between Europe and the USA over the eight years 1992-1999 (See charts op cit). Two possible (and obvious) conclusions might be drawn: Countries (ie people, companies and governments) that have plenty of money tend to spend more money on computers than countries that have less money. or Countries that invest more in computers etc become more wealthy than countries that invest less in computers etc. If the comparison was simply "real level of spending" the first interpretation might merit consideration. However, the chart shows spending as a proportion of income. Is it credible that people and companies in the wealthier economies are just frittering away money on computers - year on year on year - despite gaining no advantage? Or is it more credible to suggest that the cycle of "invest more, gain more growth" has at least an element of cause and effect? Background factors Of course, there are other factors at work, as well as the investment in and use of computers, telecommunications etc. Most of the countries in the upper (wealthier) part of the chart have an industrial background - in most cases the gap in incomes arose before the computer and internet eras. But even among the higher-income countries (above, say $20,000 per capita GDP) there is still a good correlation between IT investment and wealth. The latest report, EITO 2001, is available from European Telework Online, click here for further details. The EITO Report, 2001 edition is available here Check out our other Statistics pages For comments or questions on this page, please use the feedback form Site navigation: ETO Home | Telework | Teletrade | Telecooperation Resources database | Events | Presentations FAQs | Search the site | Be kept informed | Join the on-line discussion Development of European Telework Online has been supported by ETD, an initiative of the European Commission (DGXIII) ACTS programme Page address: http://www.eto.org.uk/uestats/graphs/it-gdp99.htm