Although many studies have explored the role of information and communication technology (ICT) in boosting productivity, there is limited evidence on how ICT investment impacts total factor productivity growth (TFPG) differently across different technically-intensive firms. This study addresses this gap by examining the effect of ICT investment on TFPG using firm-level data of the Indian manufacturing sector. The findings indicate that ICT investment has a significant, positive effect on TFPG overall, with a notably significant impact in high-tech and medium-tech manufacturing firms. However, the benefits of ICT investment are not pronounced in low-tech firms, suggesting that these firms may lack the infrastructure or digital bottlenecks. From a policy perspective, it is crucial for the government to support low-tech manufacturing firms in upgrading their technical capabilities, enabling them to compete more effectively and improve TFPG in the context of Industry 4.0. JEL Classifications: O33, D24, C36, C23, L60
Danta et al. (Fri,) studied this question.