STILL MORE ON ICT AND ECONOMIC PRODUCTIVITY

This entry draws heavily from the work of my colleague Christine Qiang.

Productivity in Europe and the United States: Analysis of the determinants and role of the New Economy
This paper notes the following stylized facts: ICT manufacturing companies’ share of total added value is higher in the United States than in Europe (respectively, 7% in the US between 1995-1998, versus an average of 5% in European countries, including 4.5% in Italy); ICT user companies’ share of total added value is higher in the US than in Europe (28%, versus a European average of 26%); and in both European countries and the United States, output and productivity growth in ICT producing sectors was higher than in all other economic sectors. By Ugo Inzerillo. EMU Monitor, Center for European Integration Studies, June, 2002. (PDF, 12 pages)
http://www.zei.de/download/zei_emu/emu-9/inzerillo.pdf

Robert J Gordon Research Web Page
Gordon is a distinguished economist, and this page provides links to a number of influential papers on the role of ICTs in the economic growth experience of the U.S. and other nations.
http://faculty-web.at.nwu.edu/economics/gordon/researchhome.html

CBO Computers & Information Sciences
This webpage provides links to papers produced by the U.S. Congressional Budget Office, including: The Role of Computer Technology in the Growth of Productivity, May 2002 (http://www.cbo.gov/showdoc.cfm?index=2886&sequence=0); The Need for Better Price Indices for Communications Investment, June 2001 (http://www.cbo.gov/showdoc.cfm?index=2886&sequence=0); Current Investments in Innovation in the Information Technology Sector: Statistical Background, April 1999 (http://www.cbo.gov/showdoc.cfm?index=1223&sequence=0); Two Approaches for Increasing Spectrum Fees, November 1998 (http://www.cbo.gov/showdoc.cfm?index=1047&sequence=0); Changing the Treatment of Software Expenditures in the National Accounts, April 1998 (http://www.cbo.gov/showdoc.cfm?index=455&sequence=0); and Emerging Electronic Methods for Making Retail Payments, June 1996 (http://www.cbo.gov/showdoc.cfm?index=14&sequence=0).
http://www.cbo.gov/byclasscat.cfm?cat=24

The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?
Abstract: “The performance of the U.S. economy over the past several years has been remarkable, including a rebound in labor productivity growth after nearly a quarter century of sluggish gains. To assess the role of information technology in the recent rebound, this paper re-examines the growth contribution of computers and related inputs with the same neoclassical framework that we have used in earlier work. Our results indicate that the contribution to productivity growth from the use of information technology — including computer hardware, software, and communication equipment — surged in the second half of the 1990s. In addition, technological advance in the production of computers appears to have contributed importantly to the speed-up in productivity growth. All in all, we estimate that the use of information technology and the production of computers accounted for about two-thirds of the 1 percentage point step-up in productivity growth between the first and second halves of the decade. Thus, to answer the question posed in the title of this paper, information technology largely is the story.” By Stephen D. Oliner and Daniel E. Sichel. February, 2000. (PDF, 48 pages.)
http://www.frbsf.org/economics/conferences/000303/papers/resurgence.pdf

Information Technology and Economic Growth: A Cross-Country Analysis
This paper analyzed data from a set of 39 countries from 1980 to 1985 that suggest that physical capital is a key factor in economic growth. However, in a subset of the data from 23 OECD countries, the author finds that there is a strong influence of IT investment. By Matti Pohjola, World Institute for Development Economics Research Working Paper No. 173 (Helsinki: United Nations University). January, 2000. (PDF, 292 KB)
http://www.wider.unu.edu/publications/wp173.pdf

Information Technology and Economic Growth: Introduction and Conclusions
The first chapter and Contents of “Information Technology, Productivity and Economic Growth: International Evidence and Implications for Economic Growth,” Edited by Matti Pohjola, WIDER Studies in Development Economics. (PDF document, 223KB)
http://www.wider.unu.edu/publications/IT-book2000-1.pdf

Globalization, Technology, and Income Inequality: A Critical Analysis
From the Abstract: “The central result of the present study with respect to developed countries is that neither trade nor technology are necessarily the most important factors in causing increased income inequality in the recent period. Although there is still considerable theoretical controversy surrounding this issue, there is robust empirical evidence to indicate that the concentration on these two factors to the exclusion of others is not justified. The paper highlights the role of social norms, economic institutions, as well as variations in employment, in causing the observed changes in income distribution.” By Ajit Singh and Rahul Dhumale, December 2000. (PDF, 47 pages)
http://www.wider.unu.edu/publications/wp210.pdf

On the Regulation of Telecommunications Markets
Abstract: “This paper discusses the theoretical concepts underlying recent developments in the regulation of telecommunications in Europe, the USA and developing countries with respect to efficiency and welfare. It focuses on analyzing standardization problems, pricing rules and entry condition related to networks and network effects and derives preliminary policy recommendations for the telecommunications industry through a discussion of network models and related empirical evidence.” By Manfred J. Holler, August 1999. (PDF, 313KB)
http://www.wider.unu.edu/publications/wp163.pdf

Information Technology and Economic Development: An Introduction to the Research Issues
From the Abstract: “There is substantial evidence that new information technologies are in many ways transforming the operations of modern economies. …Nevertheless, all spending on information technology, including hardware, software and services, does not amount to more than 3-4 per cent of nominal GDP in these countries.….Developing countries spend much less on information technology.….The sharp decline in the price of computing and communication—about 20 per cent a year in the case of computers—is, however, bringing this technology within the reach of many, if not yet all, developing countries.….Even in industrial countries, the impact of information technology has not been as deep or pervasive as the debate about the benefits of the global information society sometimes makes it appear…..More research on other countries, developed and developing, is needed before firm policy conclusions can be drawn for economic development. This research should explore the role of information technology both as an intermediate input in production and as a final good in consumption. This paper prepares ground for such work.” By Matti Pohjola, November 1998. (PDF, 241KB)
http://www.wider.unu.edu/publications/wp153.pdf

Computers and Labour Markets: International Evidence
From the Abstract: “In this study, we review the empirical evidence on the relation between computer use and labour market outcomes. More precisely, we examine the relation between the broadening use of computers on one side, and wages, skill-composition of the workforce and unemployment on the other. All evidence presented seems to point to the following conclusion: Something is going on, but there is no reason to call it skill-biased technical change in its simplest acceptance.” by Francis Kramars, October 1998. (PDF, 254KB)
http://www.wider.unu.edu/publications/wp152.pdf

Network Externality and Software Piracy
Abstract: “The pervasiveness of the illegal copying of software is a worldwide phenomenon. Software piracy implies a huge loss of potential customers of original software buyers, which directly translates into revenue losses for the software industry. Given this, conventional wisdom would suggest the need for the legal software firms and governments to take a harsh approach on piracy of software. Interestingly, there is a trend of literature, which establishes that it is actually profitable for the original software developer to allow limited piracy in the presence of network externality. The present paper wishes to demonstrate that these results cannot be accepted as a general explanation for the existence of software piracy in the real world. To prove the point, this paper comes up with a model where it shows that in the presence of intense effect of network externality, protection as opposed to allowing piracy is always optimal for the original software developer. It also shows that the incentive to protect is even higher with the presence of network externality as opposed to the case of no network externality. Whether piracy is profitable or not to the original developer depends on the market structure, demand environment and the nature of the competition.” By Sougata Poddar, December, 2002. (PDF, 182KB)
http://www.wider.unu.edu/publications/dps/dps2002/dp2002-115.pdf

The Contribution of ICT to Output Growth: A Study of the G7 Countries
Abstract: “This paper deals with the contribution of information and communication technology (ICT) to economic growth and to labour and multi-factor productivity. It uses a well-established growth accounting framework to assess the role of ICTs as capital inputs and the contribution of these capital inputs to output growth. The paper provides an international perspective by presenting results for the G7 countries. For this purpose, data on ICT investment expenditure were compiled from several sources, to construct measures of ICT capital stocks and capital services. Special care was taken to account for the methodological differences in price deflators for computers as they exist across OECD countries. For all seven countries, the report finds that ICT capital goods have been important contributors to economic growth, although the role of ICT has been most accentuated in the United States. An important limitation of the study lies in the timeliness of internationally comparable data. Calculations could only be carried out for the years up to 1996 for all G7 countries. The report points to some of the most recent studies for the United States and briefly discusses their results.” By Paul Schreyer, (2000). OECD Working Paper 89070. (PDF, 23 pages.) http://www.oecd.org/pdf/M00000000/M00000383.pdf