ABSTRACT

This study aims to investigate the effect of ICT on labour market outcomes in Cameroon. labuor market outcomes was captured on labour productivity and employment. This study obtains a panel data from conference board total economy database and world bank development index  from 1990 to 2020 using autoregressive distributed lag model and found out that has a positive effect on both labour productivity and employment in the long run.

This study suggests that a favorable economic policy should be adopted that will promote the use of information and communication technology that will increase side by side labour productivity and employment which will go a long way to augment labour market outcomes in Cameroon  

CHAPTER ONE

INTRODUCTION

1.1  Background of the study 

Nowadays world community faces the beginning of the 4^th industrial revolution. Where latest technological changes is common in our society such as artificial intelligence, processing power, Big Data, internet of things, mobile internet, cloud technologies, 3D printing ensure the labour production growth, innovative-cost rate intensification and , as a result, lead to improving life quality in the countries focused on informational sector development. Information and communication technologies (ICT) transform the labour market converting labour contents and character, forms of   employment; workplaces structure and make new demands for highly skilled labour force training.

Evidence about the contribution of Information and Communication Technologies (ICT) investment to productivity and growth has been very controversial. In developed countries and especially among the G-7 countries, ICT investment has had a large impact on productivity growth in the United States, for example, but in Japan, the United Kingdom and France labour productivity did not increase despite a high level of investment in ICT (IMF 2001). In developing countries, this controversy still persists. In the context of developed countries, Jorgensen et al., (2002) analyzed the sources of US labour productivity growth in the post-1995 period and presented projections for both output and labour productivity growth for the next decade.

They found that ICT played a substantial role in the US economy by reviving productivity. Their projections put the rate of productivity growth at 2.1 percent per year over the next decade. Daveri (2002) showed that throughout 1992-2001, even if two thirds of the European Union population reached or came much closer to the same levels of ICT diffusion as the US, ICT have so far delivered limited overall productivity gains in Europe. Hempell (2002) found significant productivity effects of ICT on German service sector. In many other studies, empirical evidence for the effects of ICT investment on firms’ performance in the context of industrialized countries has reported positive effects in the case of US large enterprises Brynjolfsson and Hitt (2000 ).

Using the production function approach, Brynjolfon and Hitt (1996) found that the gross marginal product of computer capital ranges from 56 percent to 68 percent while the gross marginal product on non-computer capital is between 4.14 percent and 6.86 percent in the United States firm-level data. An important number of studies have jointly considered both developed and developing countries. Dewan and Kraemer, 2000 (Pohjola 2001) have estimated a Cobb-Douglas function in a cross-countries analysis using GDP as output and ICT capital, non-ICT capital and labour hours as inputs. Based on data on 22 developed countries and 14 developing countries over the period 1985-1993, results indicate that the returns from ICT capital investments are positive and statistically significant for developed countries but not significant for developing countries. In developed countries, the output elasticities of ICT capital, non-ICT capital and labour are respectively 0.057, 0.160 and 0.823. In developing countries results indicate that ICT investments are not productive as the 0.593 ICT elasticity is statistically equal to zero.

As pointed out by Pohjola (2000) and contrary to results from developed countries, the authors did not include human capital in the production function. Investment in ICT being strongly correlated with investment in human capital, this seems to explain differences in results in developed and developing countries. In exploring the impact of information technology investment on economic growth in a cross-section of 39 countries in the period 1980-1995, Pohjola (2000) applied the augmented version of the neo-classical growth model. Results indicate that for the full sample, physical capital has been a key factor in the growth of GDP per worker in both developed and developing countries whereas human capital and information technology were shown to have had no strong impact.

However, in the smaller sample of 23 OECD countries, information technology has had a strong impact on growth. An explanation for the poor or non-existent impact of ICT in developing countries could be the fact that developing countries have not yet invested enough in ICT. This is not because ICT is not a priority in developing countries, but because developing countries lag behind developed countries in terms of investment level. The diffusion and introduction gap of ICT between developing and developed countries – the former having experienced ICT many years after the latter – also explain this conclusion.

As ICT is expected to take time before having its full effects on productivity, it might be normal that ICT’s impact in developed countries is greater than that in developing countries. Also, the intensity of ICT use may explain the difference. If one can find many studies centred on developed countries, it should be recognized that less has been done for developing countries and especially sub-Saharan Africa. In developing countries, some recent studies on small and medium scale enterprises in the manufacturing sector in India have reported a positive link between ICT capital and productivity Muller-Falke (2001) and between ICT adoptions and export performance Lal (1996). In sub-Saharan Africa, Chowdhury and Wolf (2002) assessed the uses of information and communication technologies and their impact on the economic performance of small and medium scale enterprises of Kenya, Tanzania and Uganda.

Findings suggest that the diffusion of ICT among East African small and medium scale enterprises is both industry and country specific. The model, based on a Cobb-Douglas specification, is modified to take into account ICT impact on labour productivity, ICT impact on return on investment and ICT impact on market expansion. Empirical findings suggest that investment in ICT has a negative impact on labour productivity and a positive impact on general market expansion. But such investment does not have any significant impact on enterprises’ return nor does it determine enterprises’ exporter status. This approach is very interesting in the sense that it underlines the relationship between labour intensity, labour productivity and ICT investments. This paper is an attempt to contribute to above-mentioned debate by measuring the effect of ICT investment on labour market outcomes in Cameroon. The analysis, concentrated on both secondary and tertiary sectors.

Measuring ICT at the aggregate level is a daunting task. However, several ICT proxies exist at the firm-level, and depending on the availability of data. Among other measures of ICT at the firm-level, there are, for example, ICT investment expenditure and the stock of a firm’s computer hardware. The role of ICT for the development of productivity has been at the forefront of development strategies (UNCTAD, 2003; 2005). ICT, broadly, allows for a reduction in transaction costs, for example, in the acquisition of intermediate inputs by deleting or by reducing the number of inte+rmediary actors in the supply chain between a firm and its suppliers, improved communications with markets and within the supply chain, and improved information about new opportunities. ICTs can also improve the internal information systems of enterprises. Given that investment is widely acknowledged as essential to improving labour productivity.

The concept of technology is at the heart of macroeconomic analysis. In standard macroeconomic growth models, labor and capital are the key factors of production that generate economic value (Jones 2016). Basic macroeconomic accounting subtracts the value of these measurable factors (the cost of labor and capital) from Gross Domestic Product (GDP) and describes the residual as productivity growth. In these neoclassical models, this residual productivity growth is the only long-term driver of higher living standards, and it is commonly referred to as “technology.” In the simplest versions of this framework, technology makes labor more productive and results in higher average wages and purchasing power. As this review will discuss, scholars have deepened and complicated this framework in recent years, but a unifying theme is that technology is closely linked to productivity growth.

However, these investments have different uses, although they are all relevant for policy purposes since ICT is driven by different forces. Firm-level empirical analysis reveals that both ICT and non-ICT-capital investment are strongly demand-driven, but ICT investment adjusts more rapidly to a given demand shock. Empirical literature widely demonstrated that ICT investments are flexible inputs that allow firms to fundamentally reorganize the production and distribution of goods and services to imcprove efficiency.  In the same vein, it is recognized that ICT investment generates higher returns to growth than the other physical capital thus producing higher level of Gross Domestic Product (GDP). Further, ICT has been the driving force behind the acceleration of productivity growth in Canada and the United States of America (USA) since 1996; also, in European countries, ICT is characterized by above normal returns.

Several studies have shown that ICT-capital investments contribute to returns at the firm-level. In this regard, Dedrick et al. (2003), for example, showed that although there is a significant contribution of Information Technology (IT) to the returns of the firm, the magnitude of the contribution varies extensively across firms. This means that some firms with similar investment in IT have performed differently. Strong evidence that emerged from this observation revealed that the difference in performance was influenced by Organizational Changes (OC).3 Several developed countries have taken a huge benefit from the adoption and use of ICT, both socially and economically.

The literature on the subject emphasizes that these benefits obtained depends on the existence of telecommunication infrastructures and of the economic development of these countries. Furthermore, despite the progress and outstanding efforts observed in the adoption and diffusion of ICT in developing countries, and particularly in Africa, some works including (International Telecommunication Union [ITU], 2014) argue that Africa still lags remarkably in the adoption and use of ICT. Like R&D, acquisition, adoption and use of new technologies, embodied in capital investment, lead to innovation. In doing so, ICT are seen as enablers of innovation, productivity and economic growth in all sectors of the economy. The use of ICTs is very widespread among firms of all sizes. Many firms are increasingly, adopting ICTs in both developed and developing countries. Firms are also driven to adopt appropriate ICTs for improving their internal processes, improving their product through faster communication with their customers, and better promoting and distributing their goods and services through online presence. Yet, there is a striking lack of robust empirical evidence on the drivers of ICT adoption, on the impact of ICT on productivity, and on the factors underlying the positive impacts of ICT in the African context.  this study seeks to fill the gap

The objective of this research is to analyse to what extent ICT skills determine individuals’ labour market transitions. A large strand of the literature has addressed the drivers and costs of job-to-job transitions. Bechichi et al. (2018) argue that in the literature two topics have been addressed prominently: first, the factor of workers’ human capital, and second, labour market institutions. According to the literature, human capital that has been accumulated throughout an individual’s career is not perfectly transferable from one job to another. Firm-specific human capital was first studied extensively by Becker (2009). The consequences of firm-specific human capital on wage developments remain inconclusive (Farber, 1999; Altonji and Williams, 2005). A series of literature has also emphasized the importance of industry specific human capital (Neal, 1995) and occupation-specific human capital (Kambourov and Manovskii, 2009). More recently, task-based human capital has received considerable attention in labour economics (Ingram and Neumann, 2006; Gathmann and Schönberg, 2010). In the context of labour mobility, the theory implies that differences in wages between a new job and an old one are greatly dependent on the differences in the task content of the job. As highlighted by the literature, some skills pay a premium in a specific firm, occupation or industry, but this premium cannot be easily transferred from one to another. McQuaid and Lindsay (2005) argue that basic ICT skills can be considered as a key transferable skill along with other competences such as team work, problem solving or interpersonal skills. To put it differently, the absence of basic ICT skills could constrain labour market opportunities severely.

In order to explain the pattern of decreasing employment and wages for the middle class, particularly in the US (Autor and Dorn, 2013; Cortes, 2016) and the UK (Goos and Manning, 2007; Gardiner and Corlett, 2015) and to a lesser extent in other European countries (Goos et al., 2009; Oesch and Rodríguez Menés, 2011), studies have argued that this can be attributed to a large extent to falling demand for routine jobs. Technological progress has accelerated the automation of routine tasks in such jobs and has therefore contributed to the falling demand for workers employed in such occupations (Goos et al., 2011). In the US, for example, such jobs have mainly been filled by middle-income workers since World War II. The development of machines and algorithms and improvements in other organisational processes has consequently lowered the demand for their skills (Autor et al., 2003).

Holmes and Tholen (2013) have analysed the job mobility of two cohorts in the UK, who were initially employed in routine occupations. They find that the shift towards non-routine occupations was supported by the increased job mobility of the older cohort. Linking this observation to the context of ICT development, the demand for workers without basic or low ICT skills is likely to decline. Several factors, such as economic shocks or fast technological progress, could accelerate this process. Workers could then either remain in such occupations until they retire or they may have to adjust and change jobs. As the research on human capital suggests, a change in jobs can have a significant impact on wage developments, depending on the mismatch between the task compositions in the new job compared with the old one. This development could call for active labour market policies in order to avoid higher rates of long-term unemployment and higher poverty rates.

The effects of labour-augmenting and labour replacing technologies on labour demand are ambiguous. An example is the introduction of technologies in agriculture. The related increases in agricultural labour productivity can be correlated with a reduction in agricultural employment if, as a result of falling relative prices of agricultural goods, economy-wide prosperity increases and household demand for agricultural produce grows less than demand for other goods. Automation, in turn, is intrinsically labour-saving, as it reduces labour requirements per unit of output produced.

However, even labour-saving technology can be associated with rising labour demand due to lower production costs. The first part of this section reviews the mechanisms that give rise to the ambiguous effects of technology on employment, and discusses their empirical relevance. By making some products or production processes obsolete, and by creating new products or expanding demand for products that are continuously innovated, technological change is necessarily associated with the reallocation of labour across and within sectors and firms. Such technology-induced reallocations affect workers differently, depending on their skills or on the tasks they perform.

ICTs tend to be used more intensively and more productively by skilled workers than by unskilled workers. Automation tends to affect routine activities more than non-routine activities, because machines still do not perform as well as humans when it comes to dexterity or communication skills.  Evidence is present in favour of the hypothesis that the labour market effects of technology are relatively more favourable to skilled workers and to workers performing tasks that are harder to automate. Countries Boston Consulting Group (2017) reports that the number of industrial robots in operation could increase from the current figure of between 1.5 and 1.75 million to between 4 and 6 million by 2025. These significant increases in automation, and the potentially even wider use of robots in non-industrial sectors, have sparked a debate on the future of work, in particular on whether the demand for human labour might decrease permanently, leading to a “jobless future” characterized by artificial intelligence and robotics at a massive scale.

Understanding how and to what extent Cameroonian firms may benefit from ICT as far as job creation and skills modification is consent is extremely important. In the light of governments’ efforts to bridge the digital divide. This is especially important since according to the results of a survey conducted in 2006 by MINPOSTEL, less than seven per cent of companies surveyed (812companies in total) had at least one computer1. The Government of Cameroon has since November 2004 launched several nationwide programs to promote the adoption of ICT by domestic firms. Precisely through the integration of ICT in the economic sector, the Government is committed to promoting a competitive economic sector through the creation of an incentive environment. Such effort also includes taxes incentives, financing of SME, protection of property as well as the proper functioning of services.

Through ICTs, we are experiencing increased exposure to external influences which have deep impacts on labour market outcomess and employees participation in the labour market Greig, (2002). We can now experience “timeliness in a given task” the capacity to function in real-time across the world without delay and at our convenience, with blurred distinction between physical and digital experiences Castells, (2000). The Information Age also affects us through its media and images, which alters our lives, communities, nations and states, and have tremendous impacts on our identities and our imagination Appadurai, (1996). Cultural flows are travelling in all directions, to and from both developed and developing countries. As a result of digital divide, the use and benefits of ICTs are a reality and a strategy that still remains out of the reach of many people in the world (Shields, 2003), but we can imagine that few are truly sheltered from the impacts of ICTs.

The communications that occur through these channels do spread beyond their initial medium through other means and therefore tend to reach much wider audiences. The contents of online communications have the ability of travelling between the physical and virtual worlds, and back again, both in developed and developing countries Lim, (2003) the inflow of labour force in and out of the country due to the in ovation of information and Communication technologies has created tremendous impact on the Cameroon economy especially on employees and labour market out comes. In every developing country like Cameroon, their goals are to transform their economy system from traditional to digital economy so as to meet up with the demands of these our contemporary era. This transformation cannot be done without the use of ICT. The introduction of ICT in Cameroon economy has both negative and positive impacts on the labour market outcomes. Narrowly we are going to observe various aspects of daily life, that are most related to labour market outcomes. This research highlights the importance of information and communication technologies on the labour market outcomes in Cameroon.

While a recent survey, carried out by the National Institute of Statistics in 2006, revealed that fifty six per cent of companies have invested in at least a basic form of ICT3, it is still unclear whether and to what extent these technologies have contributed to the growth of labour market outcome. Addressing this knowledge gap is ever more critical since there is still a kind of distrust with regard to the potential of ICT as tool for improving business productivity. Indeed, about forty per cent of local firms declared that investing in ICT is not beneficial for their activities (RIA, 2006). Given the context developed above, the aim of this the project is to investigate the relationship between ICT and labour market outcomes in Cameroon

The Cameroon economy is highly influenced by the digital world, recent survey carried out by the National Institute of Statistics in 2006, revealed that fifty-six per cent of companies have invested in at least a basic form of ICT3, it is still unclear whether and to what extent these technologies have contributed to the growth and the advancement labour market outcomes in Cameroon.

Despite the numerous advantages enjoyed by farms which are currently using the ICT3 in Cameroon there are some setbacks of these same digital system to the economy as far as employment is concern. These is because ICT utilisation in Cameroon industries encourage the use of computers in doing most of the jobs which was first of all done by man as such most workers who have not upgrade their skill or have not acquire such skill end up losing their jobs. So this research will examine the impact of information and communication technologies on employment in Cameroon.

Cameroon population was estimated to be 20 million in 2010, with almost fifty-five per cent living in urban regions and a working age population (15-64 years) of around fifty-five per cent (NIS, 2010). Although the percentage of individuals of both genders considered as economically active increased from 60.4% in 2001 to 75.5% in 2007. We are going to look at the effect of on labour productivity in Cameroon. Through ICTs, we are experiencing increased exposure to external influences which have deep impacts on labour  prudoctity and employees participation in the labour market Greig, (2002). We can now experience “timeliness in a given task” the capacity to function in real-time across the world without delay and at our convenience, with blurred distinction between physical and digital experiences Castells, (2000).

The Information Age also affects us through its media and images, which alters our lives, communities, nations and states, and have tremendous impacts on our identities and our imagination Appadurai, (1996). Cultural flows are travelling in all directions, to and from both developed and developing countries. As a result of digital divide, the use and benefits of ICTs are a reality and a strategy that still remains out of the reach of many people in the world (Shields, 2003), but we can imagine that few are truly sheltered from the impacts of ICTs. The communications that occur through these channels do spread beyond their initial medium through other means and therefore tend to reach much wider audiences. The contents of online communications have the ability of travelling between the physical and virtual worlds, and back again, both in developed and developing countries Lim, (2003) the inflow of labour force in and out of the country due to the in ovation of information and Communication technologies has created tremendous impact on the Cameroon economy especially on employees and labour market out comes. In every developing country like Cameroon, their goals are to transform their economy system from traditional to digital economy so as to meet up with the demands of these our contemporary era.

 This transformation cannot be done without the use of ICT. The introduction of ICT in Cameroon economy has both negative and positive impacts on the labour market outcomes. Narrowly we are going to observe various aspects of daily life, that are most related to labour market outcomes. This research highlights the importance of information and communication technologies on the labour market outcomes in Cameroon. While a recent survey, carried out by the National Institute of Statistics in 2006, revealed that fifty six per cent of companies have invested in at least a basic form of ICT3, it is still unclear whether and to what extent these technologies have contributed to the growth of labour market outcome. Addressing this knowledge gap is ever more critical since there is still a kind of distrust with regard to the potential of ICT as tool for improving business productivity. Indeed, about forty per cent of local firms declared that investing in ICT is not beneficial for their activities (RIA, 2006). Given the context developed above, the aim of this the project is to investigate the relationship between ICT and labour market outcomes in Cameroon.

1.2  Statement of the problem

The Cameroon economy is highly influenced by the digital world, recent survey carried out by the National Institute of Statistics in 2006, revealed that fifty-six per cent of companies have invested in at least a basic form of ICT3, it is still unclear whether and to what extent these technologies have contributed to the growth and the advancement of Cameroon national output. Hence this research is to provide the approximate degree to which ICT has affected productivity in Cameroon.

Furthermore the problem of intermediary sectors between the firms and suppler in Cameroon along the supply chain is another issue which must be address aside of providing the exact influence of ICT on productivity we are also going to recommend policies which if put in place will facilitate the flow of information through and froe the labour market sectors hence abolishing the those intermediary sectors in the supply chain of the economy. This research will also improve communication among market within the supply chain and improve information about new opportunity.

Despite the numerous advantages enjoyed by farms which are currently using the ICT3 in Cameroon there are some setbacks of these same digital system to the economy as far as employment is concern. These is because ICT utilization in Cameroon industries encourage the use of computers in doing most of the jobs which was first of all done by man as such most workers who have not upgrade their skill or have not acquire such skill end up losing their jobs. So this research will examine the impact of information and communication technologies on employment in Cameroon.