THE MARGINAL IMPACT AND SPILLOVER EFFECTS OF INCREASED EXPENDITURE ON CYBER SECURITY IN US IT INDUSTRY AND GDP GROWTH RATES

Abstract

Using simple baseline econometric equations and marginal impact differentials, the study finds that expenditure on cyber security increased over the period (2010 – 2019) to enhance security in cyber ecosystem. Furthermore, some of the legacy systems that are deployed for cyber defense are very porous and ineffective.  In 2019, the threat continued to evolve and the complexities continued to increase. The expenditure variable shows positive relationship with IT growth rate. However, the marginal analysis does not indicate positive marginal impact on productivity growth rate in the US IT industry for eight years out of ten. The data show negative marginal impact for eight years except 2014 and 2017. The major reason is that these funds are spent on the protection of cyber ecosystem and not in the expansion of cyber / IT industry products. The spillover effect of this huge spending impacted positively on US GDP and increased its economic growth rate throughout the period of study.