Authorized Authorized

ACCELERATING GROWTH
79
Figure 1.22 Firms in Mexico facing higher import competition from China use more ICTs more
productively
percentage-point change, 2008–12
7
6
a. Firms’ use of ICTs b. Percentage change in productivity associated
with 1 standard deviation change in ICT measure
with 1 standard deviation change in ICT measure
5
4
3
2
1
0
–1
–2
Computers
per worker
9.6
27.2
Percent
Share of labor
using the internet
6.0
18.0
–3
Share of labor
using the internet
Change in number
of computers
per worker
Share of e-commerce
purchases to
total purchases
e-commerce
purchases/
total purchases
–9.9
Low
competition
10.2
High
competition
Low Chinese competition
High Chinese competition
Not statistically significant
Source: Iacovone, Pereira-Lopez, and Schiffbauer 2015. Data at http://bit.do/WDR2016-Fig1_22.
Note: Chinese competition is measured as the change in the share of China in Mexico’s imports in the period 2000–08. The two groups depicted in these figures are defined as below the
median (low competition) and above the median (high competition). The Mexico ICT survey, ENTIC, represents over 52,000 manufacturing and services firms with at least
10 employees. ICT = information and communication technology.
e-commerce systems. They are also more likely to
move to more complete e-commerce systems—providing
an online order and integrating payment
system on their website—when they face more competitive
pressure. 71
Consistent with these findings, aggregate sector
and country data suggest a negative correlation
between regulatory barriers to product market competition
and firms’ investments in digital technologies.
More restrictive product market regulations on
firm entry in service sectors are associated with lower
ICT use (figure 1.23, panel a). The negative relation
prevails when comparing restrictions to domestic or
foreign entry in individual service sectors with firms’
internet use in these sectors across countries. Professional
service firms in Europe—for architecture,
design, consulting, legal, and accounting—are less
likely to sell their services online in countries that
have higher barriers to entry in these sectors. Transport
service firms are less likely to purchase cloud
computing services, such as CRM software, over
the internet in European countries that have higher
regulatory barriers for foreign firms to enter. Domestic
retail firms are less likely to use the internet for
online sales if they operate in countries with higher
entry barriers for foreign retailers. The same is true
for manufacturing firms: higher nontariff barriers to
trade are associated with lower ICT use in manufacturing
(figure 1.23, panel b). 72
Firms’ internet use varies with barriers to competition
across sectors in the same country. The Philippine
retail sector has substantial restrictions to domestic
and foreign entry and is dominated by a few incumbent
firms, while few firms use ICTs. Foreign retailers
that aim to establish a commercial presence need to
pass prequalification procedures, meet minimum capital
requirements, meet limitations to foreign equity
participation, and have the majority of the board of
directors be Filipinos. Only about 20 percent of retail
firms (with at least five employees) sell online in the
Philippines. 73 By contrast, the Philippine business process
outsourcing sector is characterized by high entry
rates and few regulatory barriers to competition. It
is intensive in ICT-related services such as software
development, animation, contact centers, and transcription.
These ICT-specific services experienced
high productivity growth in recent years and provided
about 1.2 million jobs in 2015. Similarly, Nigeria’s retail
sector, Indonesia’s banking sector, and India’s and
Bulgaria’s ICT sectors are more internet intensive and
have fewer regulatory barriers to competition in otherwise
difficult business environments.