Is it Necessary for Iran to Increase the Share of ICT Sector in GDP?

Estimations and calculations show that the ICT market in Iran was around 320 billion IRRs in 2015, which is about 2.6% of gross domestic production (GPD). at the end of the sixth plan for social and economic development of Iran, it has been set that this amount should be increased to be more than 5% of GDP and to be about 1000 billion IRRs. The present study will answer the following two questions. 1- Is increasing the share of ICT sector in GDP necessary? 2- How much does the economic growth change with one percentage increase in share of ICT sector in GDP? To answer these two questions, contribution of ICT sector on economic growth in Iran is first calculated through two methods of actual and potential contribution and then compared with each other. The results show that average GDP growth in Iran is about 3.8% for the period of 1990-2015 and, based on growth accounting, the potential contribution of ICT on economic growth is about half a percent. Actual contribution of ICT sector on growth has been higher than the potential share, except for years 1990 to 1992. Therefore, increasing value added of ICT sector increases GDP more than the increase of the value added of ICT sector, which is due to knowledge, market and network spillovers. Accordingly, increasing share of ICT sector in GDP is necessary during the sixth plan for economic development in Iran. Moreover, one percent increase in share of ICT sector in GDP increases economic growth at a rate of 0.93 percent.
JEL Classification: O47, G14, L86.