Proceedings of the 2005 International Conference on Simulation and Modelling V. Kachitvichyanukul, U. Purintrapiban, P. Utayopas, eds. 1 ABSTRACT The focus of the paper is on examining the long-run and potentially causal relationship between ICT and economic performance, in part to test the endogenous technology growth model. The paper provides a detail description of the data series used to proxy measures of ICT, followed by analysis of the relationship between the ICT series and real GDP in each country. 1 INTRODUCTION: THE NEW ZEALAND INFORMATION ECONOMY According to The World Information Technology and Services Alliance (WITSA) Digital Planet 2002, New Zealand has the highest percentage of GDP spent on ICT and experienced a compound annual growth rate of ICT spending of approximately 8.6% in the years 1993-2001, despite the slight decrease in GDP since 1997. The total spending on ICT products and services in New Zealand at the end of 2001 was US$7,164 million, 14.4% of national GDP (Digital Planet 2002). In the March 2002 financial year, the total value of the New Zealand ICT industry, excluding telecommunications, was US$7,055 million, 14.2% of GDP. Regardless of the rapid ICT development and implementation in New Zealand, domestic economic growth does not seem to have a strong correlation with ICT in the period 1993-2001 using the ICT spending data from Digital Planet 2002 as an approximate measure of the local ICT sector. 1.1 ICT and Economic growth Regardless of the rapid ICT development and implementation in New Zealand, domestic economic growth does not seem to have a strong correlation with ICT in the period 1993- 2001. As in the previous subsection, we use the ICT spending data from Digital Planet 2002 as an approximate measure of the local ICT sector and plot a scatter diagram against domestic GDP. Figure 1 below, presents a weak short run relationship between log ICT and log GDP with an R 2 value of 0.0493. Such results could be due to the short time period of the available data. Long run and more sophisticated empirical analysis may need to be undertaken before drawing any strong conclusions on the relationship. To build a complete empirical analysis between ICT and economic growth, we need a solid foundation of based upon relevant theoretical models and appropriate data and analysis. In the next section we provide a description of the data summary of relevant economic growth models; their assumptions and frameworks, and their views on how ICT would affect economic growth. This is followed by a review of recent empirical studies and a summary of commonly used ICT series. In the next section we provide a description of the data relevant for economic growth models; their assumptions and frameworks, and their views on how ICT would affect economic growth. This is followed by a review of recent empirical studies and a summary of commonly used ICT series. ICT AND CAUSALITY IN THE NEW ZEALAND ECONOMY Nancy Chu Department of Economics, Private Bag 4800, University of Canterbury, Christchurch, New Zealand Les Oxley Department of Economics, Private Bag 4800, University of Canterbury, Christchurch, New Zealand Ken Carlaw Department of Economics, Private Bag 4800, University of Canterbury, Christchurch, New Zealand