Leveraging ICT adoption : Leveraging information and communication technology adoption

To date, the conventional way of encouraging business investment in information and communication technology (ICT) has been to provide tax incentives, notably, accelerated depreciation for ICT capital assets. Despite the fact that the Canadian government has recognized the importance of ICT adoption for industrial productivity and implemented generous capital cost allowances, ICT uptake by enterprises - small and medium enterprises (SME) in particular - remains a policy challenge. There is a strong feeling within the ICT industry that a different policy mix of the incentives is required to markedly improve the adoption and use of ICTs. This paper provides an updated summary of the existing policies in Canada and other OECD countries and follows on work conducted for ITAC on 2005. (See "Incentives for ICT Adoption: Canada and Major Competitors, by Jacek Warda available at www.itac.ca). However, measures of encouraging ICT adoption by business are diverse and policy initiatives combine many different elements. Adoption strategies include tax incentives, infrastructure development, procurement policies, and R&D support initiatives. An important set of initiatives is aimed at the firm's capacity to adopt. These comprise incentives for corporate training and organizational change, and information on and demonstrations of best practice and benefits of adopting new technologies. This paper reviews these different policy modes and provides insight on the most appropriate policy mix that could be applied in Canada.