ICT intensity and New Zealand's productivity malaise: Is the glass half empty or half full?

This paper contributes to the conflicting international evidence on the impact of information and communication technology (ICT) on labour productivity (LP) growth. We examine the link between ICT intensity and New Zealand’s LP growth in 29 industries over the period 1988-2003, and over relevant sub-periods. After deriving an ICT intensity index to classify industries into ‘more ICT intensive’ and ‘less ICT intensive’, we compare LP growth rates for these two industry categories. We also employ dummy variable regression models to more formally test the relationships between ICT intensity and LP growth. The results prove sensitive to the time period specified. When breaks in the data series are taken into account, there is support for the view that LP growth of more ICT intensive industries has improved over time relative to that of other industries, even though overall LP growth was weak. Lack of LP growth per se, therefore, is not necessarily evidence against the beneficial productivity impacts of ICT.

[1]  W. Razzak.  Towards Building a New Consensus About New Zealand's Productivity , 2003 .

[2]  Van Ark,et al.  Measuring the new economy: An international comparative perspective , 2002 .

[3]  Robert J. Gordon,et al.  Does the "New Economy" Measure Up to the Great Inventions of the Past? , 2000 .

[4]  K. Stiroh.  Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say? , 2001 .

[5]  Nathan McLellan,et al.  Productivity in New Zealand 1988 to 2002 , 2003 .

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

[7]  Paul Schreyer,et al.  Comparing Labour Productivity Growth in the OECD Area: The Role of Measurement , 2003 .

[8]  Bart van Ark,et al.  Changing Gear: Productivity, ICT and Service Industries in Europe and the United States , 2002 .

[9]  Haishun Sun,et al.  Information Technology and Australia's Productivity Surge , 2001 .

[10]  S. Wardrop,et al.  Australian Use of Information Technology and its Contribution to Growth , 2002 .

[11]  Derek C. Jones.  New Economy Handbook , 2003 .

[12]  Erwin Diewert,et al.  Measuring New Zealand’s Productivity , 1999 .

[13]  I. Finkelshtain,et al.  Cross-Country Productivity Comparisons: The “Revealed Superiority” Approach , 2003 .

[14]  M. Baily,et al.  Do We Have a New E-Conomy? , 2001 .

[15]  Paul Schreyer,et al.  Economic Growth in the OECD Area: Recent Trends at the Aggregate and Sectoral Level , 2000 .

[16]  K. Stiroh,et al.  Are ICT Spillovers Driving the New Economy? , 2002 .

[17]  M. Shapiro.  Has the Rate of Economic Growth Changed? Evidence and Lessons for Public Policy , 2003 .

[18]  John G. Fernald,et al.  Does information technology explain why productivity accelerated in the United States but not the United Kingdom , 2003 .

[19]  Hans-Jürgen Engelbrecht,et al.  Information And Communication Technology And New Zealand'S Productivity Malaise: An Industry-Level Study , 2004 .

[20]  D. Galt.  New Zealand’s Economic Growth , 2000 .

[21]  R. Färe,et al.  Productivity growth in New Zealand: 1978–1998 , 2003 .

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

[23]  Bart van Ark,et al.  Production and Use of ICT: A Sectoral Perspective on Productivity Growth in the OECD Area , 2003 .

[24]  Donggyu Sul,et al.  New zealand economic papers , 2006 .

[25]  Harald Edquist,et al.  The Swedish ICT miracle - myth or reality? , 2004, Inf. Econ. Policy.

[26]  Bart van Ark,et al.  "Changing gear" : productivity, ICT and services , 2002 .

[27]  Howard H. Frederick,et al.  The knowledge economy : a submission to the New Zealand Government , 1999 .

[28]  P. Schreyer.  The Contribution of Information and Communication Technology to Output Growth: A Study of the G7 Countries , 2000 .

[29]  Matti Pohjola,et al.  Economic growth in the New Economy: evidence from advanced economies , 2002, Inf. Econ. Policy.