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Examining the TFP growth of information technology service sector: a cross-country analysis

Author

Listed:
  • Haoliang Zhu

    (Doshisha University)

  • Jiao Wang

    (Doshisha University)

Abstract

This paper aims to estimate the total factor productivity (TFP) growth of the information technology (IT) service industry and quantify the factors that affect TFP growth. It analyzes the IT service industry panel data of 42 economies from 2000 to 2014. TFP growth is decomposed into technical change (TC), scale component (Scale), and technical efficiency change (TEC). Furthermore, the sources of technical change are quantified by a time trend and observable technological shifters. The former is measured using a time trend variable, whereas the latter is captured using external factors, such as the share of foreign value-added in final outputs (FVS), which indicates how the IT industry relies on international outsourcing. Our results show that the average TFP growth rates of the IT service industry experienced an overall upward trend during the sample period. We found that the rise of TEC significantly contributed to TFP growth during 2000-2007. Moreover, the improvement of TC measured by inputs and FVS made a noticeable contribution to TFP growth during 2008-2014.

Suggested Citation

  • Haoliang Zhu & Jiao Wang, 2022. "Examining the TFP growth of information technology service sector: a cross-country analysis," Economics Bulletin, AccessEcon, vol. 42(2), pages 740-752.
    • Handle: RePEc:ebl:ecbull:eb-21-00772
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    References listed on IDEAS

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    More about this item

    Keywords

    total factor productivity; international outsourcing; technical change; JEL Category : D24; O47; F14;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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