New technologies and productivity growth in the euro area (original) (raw)
Related papers
2002
This paper provides an overview of the currently available evidence on the importance of information and communication technologies (ICT) for developments in productivity growth in the euro area. On the basis of the available data, there is evidence of an increased contribution of ICT to economic growth both in terms of production and investment in the second half of the 1990s. However, there is little, if any, evidence of significant positive spillover effects from the use of ICT to overall productivity growth. This implies that there is no reason to believe that potential output growth in the euro area has increased significantly in recent years on account of new technologies. JEL classification: E22, L63, L86, O3, O47
ICT Investment and Growth Accounts for the European Union 1980-2000
This report provides new series of ICT investment and ICT capital, estimates of the contribution of ICT capital to output and labour productivity growth, and the TFP contribution stemming from ICT production for the European Union from 1980 to 2000. The investment numbers are based on series from national statistical offices, complemented with new estimates which are specifically constructed for this study. The main findings are that even though real investment and capital service flows in the EU increased as rapidly as in the U.S., the shares of ICT in total investment and capital service flows in the EU have been approximately half to two thirds of the U.S. level throughout the period. In relative terms ICT capital in the EU was about half of the U.S. contribution to labour productivity growth up to the mid 1990s. Since the mid 1990s the relative contribution of ICT capital improved, but overall EU productivity growth collapsed. The study shows large variations in terms of ICT and TFP contributions to labour productivity growth between European countries, but no EU country (except Ireland) is ahead of the U.S. in terms of the total contribution from ICT.
Catching up or getting stuck? Europe's troubles to exploit ICT's productivity potential
2006
In this paper we extend our previous analysis of the comparative productivity performance of Europe and the U.S. to 2004, thereby covering the latest full business cycle. Our main finding is that the slower contribution of ICT to productivity growth in the EU compared to the U.S. has persisted into the early part of the 21st century. The growth differential even increased since 2000, as the U.S. shows strong labour productivity advances in market services. This may be related to a more productive use of ICT in the U.S.. However, at industry level we find no support for significant TFP (total factor productivity) spillovers from ICT investment, neither in the U.S. nor in European countries. In the 1980s we even find that ICT investment and TFP growth are negatively related, with at best normal returns in the 1970s and 1990s. We speculate that this U-shaped pattern is driven by "hard savings" from ICT investment that first lead to earning normal returns, followed by a period of experimentation during which ICT and TFP growth are negatively related. Ultimately, "soft savings" lead to productivity gains from ICT in line with the marginal cost of ICT. We argue that the realization of productivity effects from soft savings is highly dependent on the competitive process that stimulates complementary innovations and weeds out inefficient users of ICT technology. Europe risks getting stuck in an environment where the productivity gains from soft savings from ICT remain unrealized. 2 The trend growth in productivity for both the U.S. and the EU-15 was estimated using historical annual data from 1979-2004. The Hodrick-Prescott (1997) filter we employ separates the cyclical effects from the long-term, or structural, component of productivity growth. Business cycles in the U.S. and the EU are not completed synchronised but the divergent trend growth rates are clear. Note that the trend estimates for especially the final two years are less reliable than for earlier years.
Productivity, innovation and ICT in Old and New Europe
International Economics and Economic Policy, 2004
This paper investigates the productivity performance of CEE countries vis-à-vis the EU-15 during the 1990s to detect sources of convergence between the two regions. The paper shows that changes in labour intensity have been an important source of productivity convergence during the 1990s, and are likely to remain so in the near future. It is also found that despite lower income levels, ICT capital in the CEE-10 has contributed as much to labour productivity growth as in the EU-15. Industry analysis shows that manufacturing industries that have invested heavily in ICT have been key to the restructuring process. As such ICT may therefore have been an important but probably temporary source of convergence. In the longer run the impact of ICT on growth will have to come primarily from its productive use in services. The paper therefore includes a New Economy Indicator that reflects the existence of conducive environment for continued ICT investment and diffusion. It shows that further reforms are much needed for CEE countries to enter a second convergence phase in the coming decades.
Growth of ICT Capital and Deceleration of Labour Productivity in the EU Countries: The Missing Links
Computer and Information Science, 2012
Labour productivity in most of the EU countries grew much slower than in US over the last one and a half decades and the difference is attributed to the difference in the use of ICT. Analysing EU KLEMS database (capital (K), labour (L), energy (E), material (M) and service inputs (S)) and Eurostat database it is noted that the micro and small enterprises, numerically predominant in the EU countries, use much less amount of ICT. With very low proportion of enterprises with ICT installation, with less sophisticated technology and probably with the lowest amount of ICT capital, these enterprises employ relatively larger proportion of workers who use ICTs. The larger enterprises on the other hand with more sophisticated and larger quantity ICT capital employ fewer workers who handle this technology. An implication of this is the fast growth of productivity of selected highly ICT skilled workers of the larger enterprises leaving rest of the workforce to benefit least from the technology. It is obvious under this situation that the overall productivity growth of the workers would be stunted.
How ICT affects economic growth in the Euro area during the economic crisis
2020
The financial and economic crisis in Europe highlighted issues related to the competitiveness of member states, as well as the importance of measuring each country’s economic efficiency. Professional experts and the academic community are making efforts to develop appropriate strategies for each country to achieve sustainable growth. In the era of international competition, Information and Communications Technologies (ICTs) have been studied as a source for economic growth. This current study aims to expand our understanding on how ICTs can lead to economic growth in the Eurozone, officially called the Euro area. Our research targeted a 20-year period (1996–2016) but most emphasis has been put on the period of the economic crisis (2008–2016). Growth accounting methodology has been used, alongside regression analysis and the Cobb-Douglas production function, in order to estimate the Eurozone countries’ production functions. Results indicate that ICT capital is a factor of growing imp...
Does Ict Capital Affect Economic Growth in the EU-15 and EU-12 Countries?
Journal of Business Economics and Management, 2014
The paper examines economic growth in old and new member countries of the European Union (EU-15 and EU-12) during the years of 1994–2000 and 2001–2008 mainly due to changes in information and communication technology (ICT) capital development. The first group EU-15 is presented by old EU countries and the second group EU-12 is presented by new member countries that joined the EU in 2004–2007. The threefactor Cobb-Douglas production function is estimated through the panel general least squares method. The input factors that might influence the economic growth are labour, ICT capital services and non-ICT capital services. Since ICT capital growth data are not available for all selected economies, the groups of countries were reduced to EU-14 and EU-7. The estimated panel production functions confirmed that the average growth of GDP in the EU-7 countries was supported by the stable growth of labour quantity and ICT-capital and increasing total factor productivity. A short-term drop in ...