ECONOMYNEXT - Sri Lanka's economic output could grow an extra 1.4 billion over the next 10 years if the country cut tariffs by joining the Information Technology Agreement, a think tank has said.
"Increasing the use of technology in all sectors of the economy is one of the most important drivers of economic growth in developing countries because it enhances productivity, spurs innovation, and bolsters living standards," Stephen Ezell, vice president of Information Technology and Innovation Foundation said in a statement.
"If Sri Lanka joins the Information Technology Agreement, its businesses and consumers will use more technology products because of lower prices, while becoming more deeply integrated in global value chains for ICT production.
"This will spur significant economic growth for the country and generate a substantial amount of tax revenue to offset any lost tariff revenue.”
Sri Lanka has already indicated interest in joining the ITA and World Trade Organization specialists came to the island in July to brief officials.
Sri Lanka wants to join the ITA partly to make it easier to participate in global production networks.
The report said lost revenues from tax cuts would be recovered over time, with 47 percent coming back in 10 years, based on the report's simulations.
Established in 1996, the Information Technology Agreement (ITA) eliminates tariffs on many ICT products for its 82 signatory countries.
The agreement was expanded in 2015 to add 201 new ICT product lines, with 54 nations have signed on to the to the expanded agreement (ITA2)., ITIF said.
ITA accession is not only good for ICT goods- and services-producing sectors, but to all enterprises and industries that use ICTs and use them to digitalize their businesses and operations.
"Countries that haven’t joined the ITA are missing a significant opportunity for economic growth, innovation, and prosperity," Ezell said.
"Joining the ITA makes countries more attractive locations for ICT goods and services producers and exporters, and sends a strong signal that these countries are open for business."
The report said Indonesia, Vietnam and Laos were also not yet in the agreement.