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Not only Nokia: what Finland tells us about "new economy" growth

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Author Info
Francesco Daveri
Olmo Silva

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Abstract

"Is there a relation between information technologies and the growth rate of productivity? Is this relation mainly due to the efficiency-enhancing effects of few leading industries or rather to the pervasive spreading of IT throughout the economy? Our country study on Finland in the 1990s is a contribution to shed light on these issues. We find that Nokia, the world leader in cellular phone production, directly and substantially contributed to enhance productivity growth in Finland. Productivity growth gains outside Nokia and few other IT-related service industries have been small, temporary, or non-existent at all, though. We also provide two pieces of evidence against the existence of technological spillovers between Nokia and the other fast-growing industries in the Finnish economy. As shown by the Finnish input-output table, the thinness of the inter-industry linkages between the Nokia industry and the rest of the economy indicates that productivity gains of the size recorded in the few other fast-growing service industries can be associated to Nokia's productivity boom only to a very small extent. Parallel statistical analysis also shows a striking association between the timing and the industry distribution of productivity gains and the declining pace of the price of machinery and equipment investment goods in those industries. This is evidence that TFP growth increases in those industries should be mostly attributed to the decline in the world price of computing power." Copyright © CEPR, CES, MSH, 2004..

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0327.2004.00120.x
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Publisher Info
Article provided by CEPR, CES, MSH in its journal Economic Policy.

Volume (Year): 19 (2004)
Issue (Month): 38 (04)
Pages: 117-163
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Handle: RePEc:bla:ecpoli:v:19:y:2004:i:38:p:117-163

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  1. Elina Berghäll, 2006. "Technical Efficiency in an R&D Intensive Industry: Finnish ICT Manufacturing," VATT Discussion Papers 389, Government Institute for Economic Research (VATT). [Downloadable!]
  2. Elina Berghäll, 2006. "R&D and Productivity Growth in Finnish ICT Manufacturing," VATT Discussion Papers 388, Government Institute for Economic Research (VATT). [Downloadable!]
  3. Daniel Lind, 2005. "Manufacturing Productivity in Sweden: an International Perspective Since 1960," International Productivity Monitor, Centre for the Study of Living Standards, vol. 11, pages 47-56, Fall. [Downloadable!]
  4. Elina Berghäll, 2006. "Technical Change, Efficiency, Firm Size and Age in an R&D Intensive Sector," VATT Discussion Papers 390, Government Institute for Economic Research (VATT). [Downloadable!]
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