It is now evident in the literature that the information and communication technology (ICT) has a positive and significant impact on the productivity and economic growth. Most studies in this area, however, are limited to the developed countries. Given different regulations and economic conditions, and also an increasing trend in allocating resources to ICT in developing countries, it is important to examine the impact of ICT spending in developing countries on the productivity and growth.
In this study, we search for an empirical relationship between ICT spending and labor productivity across the Iranian manufacturing industries. We use the survey data on the four-digit large manufacturing industries for the period 2000-2001. In order to control for the heterogeneity among different industry groups, we use the multilevel model. Our results show that the net effect of the ICT on the labor productivity is positive and significant, but not as high as what has been found in the developed countries.