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Quantifying the Impact of ICT Capital on Output Growth: A Heterogeneous Dynamic Panel Approach

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  • Mary O'Mahony
  • Michela Vecchi

Abstract

Using industry data for the United States and the United Kingdom, we provide new evidence on the impact of information and communications technology (ICT) capital on real output growth. The traditional industry panel data analysis fails to find a positive contribution. We argue that this is due to heterogeneity across industries, particularly in the time dimension. Pooling the data for the two countries and using a dynamic panel data estimation method yield a positive and significant effect of ICT on output growth. Individual country estimates suggest a strong impact in the United States, while results are less conclusive in the United Kingdom. Copyright (c) The London School of Economics and Political Science 2005.

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Bibliographic Info

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 72 (2005)
Issue (Month): 288 (November)
Pages: 615-633

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Handle: RePEc:bla:econom:v:72:y:2005:i:288:p:615-633

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Cited by:
  1. Robert Inklaar & Marcel P. Timmer & Bart van Ark, 2007. "Mind the Gap! International Comparisons of Productivity in Services and Goods Production," German Economic Review, Verein für Socialpolitik, vol. 8, pages 281-307, 05.
  2. Mari Kangasniemi & Matilde Mas & Catherine Robinson & Lorenzo Serrano, 2012. "The economic impact of migration: productivity analysis for Spain and the UK," Journal of Productivity Analysis, Springer, vol. 38(3), pages 333-343, December.
  3. Dimelis, Sophia P. & Papaioannou, Sotiris K., 2011. "ICT growth effects at the industry level: A comparison between the US and the EU," Information Economics and Policy, Elsevier, vol. 23(1), pages 37-50, March.
  4. Maryam Farhadi & Ismail Rahmah, 2011. "Information and Communication Technology Externalities and Economic Growth in Newly Industrialized Countries," Iranian Economic Review, Economics faculty of Tehran university, vol. 16(3), pages 45-65, fall.
  5. Carmichael, Fiona & Ercolani, Marco & Kang, Lili & Maimaiti, Yasheng & O'Mahony, Mary & Peng, Fei & Robinson, Catherine, 2009. "Training, education and productivity," MPRA Paper 39899, University Library of Munich, Germany.
  6. Christian M. Dahl & Hans Christian Kongsted & Anders Sørensen, 2010. "ICT and Productivity Growth in the 1990's: Panel Data Evidence on Europe," CREATES Research Papers 2010-47, School of Economics and Management, University of Aarhus.
  7. Thomas Strobel, 2012. "New evidence on the sources of EU countries’ productivity growth—industry growth differences from R&D and competition," Empirica, Springer, vol. 39(3), pages 293-325, August.
  8. Francesco Venturini, 2009. "The long-run impact of ICT," Empirical Economics, Springer, vol. 37(3), pages 497-515, December.
  9. Kirby, Simon & Riley, Rebecca, 2008. "The external returns to education: UK evidence using repeated cross-sections," Labour Economics, Elsevier, vol. 15(4), pages 619-630, August.
  10. Mason, Geoff & O'Leary, Brigid & Vecchi, Michela, 2012. "Certified and uncertified skills and productivity growth performance: Cross-country evidence at industry level," Labour Economics, Elsevier, vol. 19(3), pages 351-360.
  11. Ana Rincon & Michela VECCHI & Francesco VENTURINI, 2012. "ICT spillovers, absorptive capacity and productivity performance," Quaderni del Dipartimento di Economia, Finanza e Statistica 103/2012, Università di Perugia, Dipartimento Economia, Finanza e Statistica.
  12. Danny Leung & Yi Zheng, 2012. "What affects MFP in the long-run? Evidence from Canadian industries," Applied Economics, Taylor & Francis Journals, vol. 44(6), pages 727-738, February.
  13. Alkhathlan, Khalid & Gately, Dermot & Javid, Muhammad, 2014. "Analysis of Saudi Arabia's behavior within OPEC and the world oil market," Energy Policy, Elsevier, vol. 64(C), pages 209-225.
  14. Sophia P. Dimelis & Sotiris K. Papaioannou, 2011. "Technical Efficiency and the Role of ICT: A Comparison of Developed and Developing Countries," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 47(0), pages 40-53, July.
  15. Meijers, Huub, 2007. "ICT Externalities: Evidence from cross country data," MERIT Working Papers 021, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  16. Federico Biagi, 2013. "ICT and Productivity: A Review of the Literature," JRC-IPTS Working Papers on Digital Economy 2013-09, Institute of Prospective Technological Studies, Joint Research Centre.
  17. Kim, Sung Min & Mahoney, Joseph T., 2008. "Resource Co-specialization, Firm Growth, and Organizational Performance: An Empirical Analysis of Organizational Restructuring and IT Implementations," Working Papers 08-0107, University of Illinois at Urbana-Champaign, College of Business.
  18. Francesco VENTURINI, 2008. "Information Technology, Research & Development, or Both? What Really Drives A Nation's Productivity," Working Papers 321, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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