<p>Previous research has found that IT investment is associated with significant productivity gains for developed countries but not for developing countries. Notwithstanding the lack of evidence of productivity gains, developing countries have increased their investment in IT dramatically. There is a need for new research to study whether the investment has begun to pay off in greater productivity for developing countries. </p>
<p>We analyze new data on IT investment and productivity for 41 countries from 1985- 2004, and compare the results from 1994-2004 with the years (1985-1993) covered in earlier research. We find that developing countries have achieved significant productivity gains from IT investment in the more recent period as they have increased their IT capital stocks and gained experience with the use of IT. We also find several complementary factors that have an impact on the relationship of IT to productivity, including education, telecommunications pricing and investment, and inward foreign investment. </p>