ICT within CGE for European Union Economies

Information and Communication Technologies (ICT) have significantly altered the way an economy operates. On the one hand ICT has become an industry of growing size and importance in its own right, while on the other hand ICT is recognized as one of the key current enabling technologies providing critical input to many other sectors of the economy. At the European Union (EU) level the ICT sector is a relatively small but a potent industry, which employs 3% of labor and represents 5% of EU GDP, but is far ahead of other sectors in terms of R&D expenditure (26%) and employment of researchers (32%). This paper reports progress on incorporating the ICT sector into a multi-sectoral, multi-country Computable General Equilibrium (CGE) model with focus on EU economies and special attention to the role of ICT sector as the R&D performer. The ICT industry is considered as consisting of six sub-sectors: IT Components, IT Equipment, Telecom and Multimedia Equipment, Measurement Instruments, Telecom Services, Computer Services and Software.