You Say You Want A Revolution: Information Technology and Growth, Issues 2002-2070
The information technology (IT) revolution has arrived, but how much will it change the world? It has been established that IT is contributing to labor productivity growth through both increases in the levels of IT capital per worker and total factor productivity (TFP) growth in the production of IT equipment. The main outstanding issue is whether IT is contributing to TFP growth more generally. Using data on IT expenditure and production for a broad sample of countries, we find a positive, large, and significant effect of IT expenditure on the acceleration in TFP in the late 1990s and a smaller-and significant-effect of IT production. We also find evidence that the impact of IT expenditure on TFP growth increases over time, suggesting that spillovers materialize gradually. Our results suggest that the increase in IT expenditure across industrial countries during 1995-2000 will eventually lead to an average increase in TFP growth of about one-third of 1 percent per year.
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Methodology and Data IV Results V Conclusions References Tables 1 Acceleration of Labor Productivity in the United States
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absolute values acceleration in labor acceleration in TFP adjusted EDP expenditure Bold numbers indicate capital in national capital stock Change in EDP coefficients on EDP Colecchia 2001 contributed to labor contribution of IT-related correlation cross-section and panel cross-section regression Cyclical Effect Daveri deepening and TFP dependent variable EDP equipment EDP production edpprod equal across countries Europe OECD Europe existing literature expenditure and production expenditure data F-test falling prices finds that IT-related GDP per capita gdppc growth accounting hedonic prices Il.a impact on TFP increase in TFP information technology investment IT-related activities IT-related capital deepening Japan labor productivity growth level of EDP numbers in parentheses OECD Europe edpexp OECD Europe OECD one-sided test overall capital deepening panel regressions Panel Results parentheses are absolute percent level percent of GDP percentage points positive Reed returns to scale Roeger semiconductors share of capital significant TFP growth Total factor productivity United Kingdom variation in TFP