ICT as a general-purpose technology: The productivity of ICT in the United States revisited

Researchers have long been puzzled by ICT's (Information and Communication Technology) contributions towards (productivity) growth. This paper investigates and reveals the multi-facets of ICT productivity and the mechanism through which ICT affects productivity by bringing all the distinct streams of existing findings together. In particular, we develop a two-level frontier-efficiency model to examine how ICT's direct and indirect impact on different components of productivity is related to the economic growth in the US. Our empirical analysis has confirmed that ICT investment does contribute to productivity but not in the usual manner – we find a positive (but lagged) ICT effect on technological progress. We argue that for a positive ICT role on growth to actually take place, a period of negative relationship between productivity and ICT investment together with ICT-using sectors’ capacity to learn from the embodied new technology was crucial. In addition, it took a learning period with appropriate complementary co-inventions for the new ICT-capital to become effective and its gains to be realized. Our findings provide solid, further empirical evidence to support ICT as a general purpose technology.

[1]  Tobias Kretschmer,et al.  ICT and productivity: conclusions from the empirical literature , 2013, Inf. Econ. Policy.

[2]  Lung-fei Lee,et al.  The measurement and sources of technical inefficiency in the Indonesian weaving industry , 1981 .

[3]  Kenneth I. Carlaw,et al.  Economic Transformations: General Purpose Technologies and Long Term Economic Growth , 2006 .

[4]  Kevin J. Stiroh,et al.  Computers, Productivity, and Input Substitution , 1998 .

[5]  G. Battese,et al.  Frontier production functions, technical efficiency and panel data: With application to paddy farmers in India , 1992 .

[6]  Susanto Basu,et al.  Information and Communications Technology as a General-Purpose Technology: Evidence from U.S Industry Data , 2006 .

[7]  Bruce D. Baker,et al.  Can Flexible Non-Linear Modeling Tell Us Anything New about Educational Productivity?. , 2001 .

[8]  Raphael N. Markellos,et al.  Evaluating public transport efficiency with neural network models , 1997 .

[9]  Kenneth I. Carlaw,et al.  Gpt-Driven, Endogenous Growth , 2006 .

[10]  Charles I. Jones.  Introduction to Economic Growth , 1997 .

[11]  E. Helpman.  General purpose technologies and economic growth , 1998 .

[12]  Luigi Paganetto,et al.  ICT Investment, Productivity and Efficiency: Evidence at Firm Level Using a Stochastic Frontier Approach , 2003 .

[13]  Hiroshi Ohashi,et al.  Learning by Doing, Export Subsidies, and Industry Growth: Japanese Steel in the 1950s and 1960s , 2005 .

[14]  Susanto Basu,et al.  Appropriate Technology and Growth , 1996 .

[15]  Gary Koop,et al.  Modeling the Sources of Output Growth in a Panel of Countries , 2000 .

[16]  S. Basu,et al.  Productivity Growth in the 1990s: Technology, Utilization, or Adjustment? , 2001 .

[17]  P. Schmidt,et al.  Production Frontiers and Panel Data , 1984 .

[18]  Gary Koop,et al.  The components of output growth: A stochastic frontier analysis , 1999 .

[19]  R. T. Due.  The productivity paradox revisited , 1994 .

[20]  Mary O'Mahony,et al.  ICT and Europe's Productivity Performance: Industry-Level Growth Account Comparisons with the United States , 2005 .

[21]  E. Brynjolfsson,et al.  Beyond Computation: Information Technology, Organizational Transformation and Business Performance , 2000 .

[22]  Kevin J. Stiroh,et al.  Information Technology and Productivity Growth in the 2000s , 2007 .

[23]  D. Jorgenson,et al.  A Retrospective Look at the U.S. Productivity Growth Resurgence , 2007 .

[24]  Stephen D. Oliner,et al.  Information technology and productivity: where are we now and where are we going? , 2002 .

[25]  Some New Semiparametric Panel Stochastic Frontiers A Bayesian Penalized Approach , 2004 .

[26]  Daniel A. Levinthal,et al.  Innovation and Learning: The Two Faces of R&D , 1989 .

[27]  Khuong M. Vu,et al.  Information and Communication Technology (ICT) and Singapore's economic growth , 2013, Inf. Econ. Policy.

[28]  D. Jorgenson,et al.  Growth of US Industries and Investments in Information Technology and Higher Education , 2003 .

[29]  R. Tibshirani,et al.  Generalized Additive Models , 1991 .

[30]  Les Oxley,et al.  Resolving the productivity paradox , 2008, Math. Comput. Simul..

[31]  D. Jorgenson,et al.  Raising the Speed Limit: U.S. Economic Growth in the Information Age , 2000 .

[32]  David B. Dunson,et al.  Bayesian Data Analysis , 2010 .

[33]  Landon Kleis,et al.  Information Technology and Intangible Output: The Impact of IT Investment on Innovation Productivity , 2012, Inf. Syst. Res..

[34]  Stephen D. Oliner,et al.  Federal Reserve Board , 2001 .

[35]  A. Colecchia,et al.  ICT Investment and Economic Growth in the 1990s: Is the United States a Unique Case? A Comparative Study of Nine OECD Countries , 2002 .

[36]  Michael T. Kiley.  Computers and growth with frictions: aggregate and disaggregate evidence , 2001 .

[37]  Stephen D. Oliner,et al.  The Resurgence of Growth in the Late 1990s: Is Information Technology the Story? , 2000 .

[38]  P. Schmidt,et al.  Production frontiers with cross-sectional and time-series variation in efficiency levels , 1990 .

[39]  E. Brynjolfsson,et al.  Paradox Lost? Firm-Level Evidence on the Returns to Information Systems Spending , 1996 .

[40]  B. Silverman,et al.  Nonparametric regression and generalized linear models , 1994 .

[41]  B. Silverman,et al.  Nonparametric Regression and Generalized Linear Models: A roughness penalty approach , 1993 .

[42]  K. Kraemer,et al.  : Evidence from , 2022 .

[43]  Erik Brynjolfsson,et al.  The productivity paradox of information technology , 1993, CACM.

[44]  Efthymios G. Tsionas,et al.  Inference in dynamic stochastic frontier models , 2006 .

[45]  Benjamin B. M. Shao,et al.  The business value of information technology and inputs substitution: The productivity paradox revisited , 2006, Decis. Support Syst..

[46]  Kenneth I. Carlaw,et al.  Externalities, technological complementarities and sustained economic growth , 2002 .

[47]  Paul A. David,et al.  The Dynamo and the Computer: An Historical Perspective on the Productivity Paradox , 2010 .

[48]  Kenneth L. Kraemer,et al.  Information technology and economic performance: A critical review of the empirical evidence , 2003, CSUR.

[49]  Michael R. Pakko,et al.  What Happens When the Technology Growth Trend Changes?: Transition Dynamics, Capital Growth and the 'New Economy' , 2001 .

[50]  J. V. Reenen,et al.  Skill-Biased Organizational Change? Evidence from a panel of British and French establishments , 2001 .

[51]  Per Krusell,et al.  Can Technology Improvements Cause Productivity Slowdowns? , 1996, NBER Macroeconomics Annual.

[52]  Susanto Basu,et al.  Information and Communications Technology as a General-Purpose Technology: Evidence from US Industry Data , 2007 .

[53]  Erik Brynjolfsson,et al.  Intangible Assets: Computers and Organizational Capital , 2002 .

[54]  Stephen D. Oliner,et al.  The Resurgence of Growth in the Late 1990s: Is Information Technology the Story? , 2000 .

[55]  Thanasis Stengos,et al.  Nonlinearities in economic growth: A semiparametric approach applied to information technology data , 2007 .

[56]  Aditya Bhattacharjea,et al.  A Critical Review of the Empirical Evidence , 2006 .

[57]  Robert H. McGuckin,et al.  Computers and Productivity: Are Aggregation Effects Important? , 2002 .

[58]  C. L. Benkard.  Learning and Forgetting: the Dynamics of Aircraft Production , 1999 .

[59]  Growth and Productivity Accounts from EU KLEMS: An Overview , 2007, National Institute Economic Review.

[60]  Elena Ketteni.  Information Technology and Economic Performance in U.S Industries , 2009 .

[61]  Mary O'Mahony,et al.  Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database , 2009 .

[62]  Winston T. Lin.  The business value of information technology as measured by technical efficiency: Evidence from country-level data , 2009, Decis. Support Syst..