special issue: The economic contribution of information technology: Towards comparative and user studies

By what process does technical change in information technology (IT) increase economic welfare? How does this process result in increases in welfare at different rates in different countries and regions? This paper considers existing literature on measuring the economic benefits from information technology, emphasizing comparative issues and user studies. Following Bresnahan and Trajtenberg (1995), we call the invention associated with customizing the technological frontier to the unique needs of users in particular regions "co-invention", placing emphasis on understanding how its determinants vary across users in different regions. We develop a framework for understanding the processes behind value-creation, demand-side heterogeneity and co-inventive activity. Then we discuss why these processes make measuring the welfare benefits from advances in information technology particularly difficult. We highlight the metrics currently available for measuring the economic pay-out of the IT revolution and identify which of these vary meaningfully in a comparative regional context. Finally, we finish with observations about further areas of research.

[1]  Z. Griliches.  HYBRID CORN: AN EXPLORATION IN THE ECONOMIC OF TECHNOLOGICAL CHANGE , 1957 .

[2]  N. Rosenberg.  Technological Change in the Machine Tool Industry, 1840–1910 , 1963, The Journal of Economic History.

[3]  Nathan Rosenberg,et al.  Perspectives on technology , 1977 .

[4]  P. Stoneman,et al.  The Economic Analysis of Technological Change , 1983 .

[5]  T. Bresnahan.  Measuring the Spillovers from Technical Advance: Mainframe Computers inFinancial Services , 1986 .

[6]  Kenneth Flamm,et al.  Targeting the Computer: Government Support and International Competition , 1987 .

[7]  Paul Israel,et al.  The Sources of Innovation , 1990 .

[8]  M. Baily,et al.  The Productivity Slowdown, Measurement Issues, and the Explosion of Computer Power , 1989 .

[9]  Dale W. Jorgenson,et al.  Technology and Capital Formation , 1989 .

[10]  James Cornford,et al.  Computer Systems Development: History, organization and implementation , 1990 .

[11]  Manuel Trajtenberg,et al.  Economic Analysis of Product Innovation: The Case of CT Scanners , 1990 .

[12]  P. David.  The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox , 1990 .

[13]  Daniel Minoli.  Telecommunications Technology Handbook , 1991 .

[14]  Paul Stoneman,et al.  RANK, STOCK, ORDER AND EPIDEMIC EFFECTS IN THE DIFFUSION OF NEW PROCESS TECHNOLOGIES: AN EMPIRICAL MODEL , 1993 .

[15]  Ellen L. Dulberger,et al.  Sources of Price Decline in Computer Processors: Selected Electronic Components , 1993 .

[16]  Z. Griliches,et al.  Econometric Estimates of Prices Indexes for Personal Computers in the 1990s , 1993 .

[17]  R. Barras.  Interactive innovation in financial and business services: The vanguard of the service revolution , 1993 .

[18]  Murray F. Foss,et al.  Price Measurements and Their Uses , 1993 .

[19]  Neil Gandal.  Hedonic Price Indexes for Spreadsheets and an Empirical Test for Network Externalities , 1994 .

[20]  I. Hendel,et al.  Estimating Multiple-Discrete Choice Models: An Application to Computeri-Zzation Returns , 1994 .

[21]  E. Brynjolfsson,et al.  Information Technology As A Factor Of Production: The Role Of Differences Among Firms , 1995 .

[22]  Maurice Estabrooks.  Electronic Technology, Corporate Strategy, and World Transformation , 1995 .

[23]  Richard N. Langlois,et al.  Firms, Markets and Economic Change: A dynamic Theory of Business Institutions , 1995 .

[24]  S. Greenstein,et al.  Measuring the Performance of a Protected Infant Industry: The Case of Brazilian Microcomputers , 1995 .

[25]  Robert W. Crandall,et al.  Talk is Cheap: The Promise of Regulatory Reform in North American Telecommunications , 1996 .

[26]  Mitchell Moss,et al.  Leaders and Losers on the Internet , 1996 .

[27]  T. Bresnahan,et al.  Technical Progress and Co-Invention in Computing and in the Use of Computers , 1996 .

[28]  David C. Mowery,et al.  The international computer software industry : a comparative study of industry evolution and structure , 1996 .

[29]  Erik Brynjolfsson,et al.  The Contribution of Information Technology to Consumer Welfare , 1996, Inf. Syst. Res..

[30]  Mary Meeker,et al.  The Internet Report , 1996 .

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

[32]  P. Spiller,et al.  Estimating the Welfare Effects of Digital Infrastructure , 1996 .

[33]  William Lehr,et al.  Computer Use and Productivity Growth in federal Government Agencies , 1996 .

[34]  Timothy F. Bresnahan,et al.  Industrial Dynamics and the Evolution of Firms' and Nations' Competitive Capabilities in the World Computer Industry , 1997 .

[35]  Timothy F. Bresnahan,et al.  The Economics of New Goods , 1997 .

[36]  P. Spiller,et al.  The Evolution of Advanced Large Scale Information Infrastructure in the United States , 1997 .

[37]  Jerry A. Hausman,et al.  Cellular Telephone, New Products and the CPI , 1997 .

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

[39]  S. Greenstein,et al.  Please send correspondence to: , 1998 .

[40]  S. Greenstein.  Universal Service in the Digital Age: The Commercialization and Geography of U.S. Internet Access , 1998 .

[41]  C. Antonelli.  Localized technological change, new information technology and the knowledge-based economy: The European evidence , 1998 .

[42]  David E. Stout,et al.  Dynamics of Industrial Clustering: International Comparisons in Computing and Biotechnology , 1998 .

[43]  Maureen McKelvey,et al.  Evolutionary innovations: learning, entrepreneurship and the dynamics of the firm , 1998 .

[44]  David C. Mowery,et al.  Sources of Industrial Leadership , 1999 .

[45]  R. Boschma,et al.  Evolutionary economics and economic geography , 1999 .

[46]  Peter J. Klenow,et al.  Evidence on Learning and Network Externalities in the Diffusion of Home Computers* , 2002, The Journal of Law and Economics.

[47]  Timothy F. Bresnahan,et al.  Technological Competition and the Structure of the Computer Industry , 2003 .