Can IT Services Drive Economic Growth: A Linkage Analysis of the 'Pre-Industrial' Production Context in Nigeria

Several countries are pursuing a service-led structural transformation process inadvertently or by design. This thesis examines the process of structural change in a specific class of developing countries, termed ‘pre-industrial’. It investigates whether the Information Technology (IT) service sector can catalyse economic growth, performing like the manufacturing sector in industrial economies. Pre-industrial countries such as Nigeria are undergoing ‘pre-industrial deindustrialisation’, whereby the share of manufacturing in employment and value-added declines at lower levels of per-capita income compared to industrialised countries. In this thesis, the precipitating factors for the emergence of services in the pre-industrial context are investigated from the perspective of the interaction between deindustrialisation and tertiarisation processes. Service sector heterogeneity is re-examined from the viewpoint of IT producer service use in the production process, as not all services can drive economic growth. A composite index for IT Producer Services is developed using Principal Components Analysis (PCA) to facilitate evaluation of the contribution of IT services to production and economic growth in pre-industrial contexts. A Hirschmanian linkage approach is employed to determine the growth-inducing effects of IT Producer Services at the firm level. Production, fiscal or consumption, financial and technological linkages, all of which aid linkage formation, are juxtaposed against technological capabilities in firms. In this thesis, a mixed methods approach is deployed involving case studies of selected firms, using results from a survey of IT firms in Lagos, and statistical analysis to develop a composite index. This thesis finds that the deindustrialisation trajectory of a country and the drivers of deindustrialisation and tertiarisation are fundamental to the role of services in catalysing growth. These processes shape the producer services which emerge, the technological capabilities developed in producer service firms, the linkages formed between sectors and how IT producer services are utilised in the production process to generate economic growth