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Information And Communication Technology And New Zealand'S Productivity Malaise: An Industry-Level Study

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  • Engelbrecht, Hans-Jurgen
  • Xayavong, Vilaphonh
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    Abstract

    This paper examines the link between information and communication technology (ICT) and New Zealand's labour productivity (LP) growth in 29 industries over the period 1988-2003, and over relevant sub-periods. After deriving an ICT intensity index in order to classify industries into 'more ICT intensive' and 'less ICT intensive', we compare LP growth rates for these two industry groupings. Further, we employ dummy variable regression models, including difference-in-difference models, to more formally test the relationship between ICT intensity and LP growth. The results prove to be sensitive to the time period specified. When breaks in the data series are taken into account, there seems to be support for the view that LP growth of more ICT intensive industries has improved over time relative to that of less ICT intensive industries, even though overall LP growth was weak. To put it differently, the restrained New Zealand LP performance apparent from our data seems to have been due mainly to the decline in LP growth of less ICT intensive industries. Our results illustrate that lack of overall productivity growth per se is not necessarily evidence against the beneficial productivity impacts of ICT. Rather, the proper comparison is that between the productivity performance of more ICT intensive versus less ICT intensive industries. However, our results can only be taken as suggestive, given the fact that ICT is but one of the determinants of LP, and given the many inherent measurement problems.

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    Bibliographic Info

    Paper provided by Massey University, Department of Applied and International Economics in its series Discussion Papers with number 23698.

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    Date of creation: 2004
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    Handle: RePEc:ags:masddp:23698

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    Related research

    Keywords: Information and Communication Technology; Labour Productivity Growth; ICT Intensive Industries; New Zealand.; Productivity Analysis; O47; O50;

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    1. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The case of the missing productivity growth: or, does information technology explain why productivity accelerated in the United States but not the United Kingdom?," Working Paper Series WP-03-08, Federal Reserve Bank of Chicago.
    2. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-61, May.
    3. Bar-Shira, Ziv & Finkelshtain, Israel & Simhon, Avi, 2003. " Cross-Country Productivity Comparisons: The "Revealed Superiority" Approach," Journal of Economic Growth, Springer, vol. 8(3), pages 301-23, September.
    4. Melleny Black & Melody Guy & Nathan McLellan, 2003. "Productivity in New Zealand 1988 to 2002," New Zealand Economic Papers, Taylor & Francis Journals, vol. 37(1), pages 119-150.
    5. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
    6. Stiroh, Kevin J, 2002. "Are ICT Spillovers Driving the New Economy?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(1), pages 33-57, March.
    7. Matthew D Shapiro, 2003. "Has the rate of economic growth changed? Evidence and lessons for public policy," Reserve Bank of New Zealand Discussion Paper Series DP2003/07, Reserve Bank of New Zealand.
    8. W A Razzak, 2004. "Towards Building A New Consensus About New Zealand’s Productivity," GE, Growth, Math methods 0405002, EconWPA.
    9. Francesco Daveri, 2003. "Information Technology and Productivity Growth Across Countries and Sectors," Working Papers 227, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    10. van Ark, Bart, 2002. "Measuring the New Economy: An International Comparative Perspective," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(1), pages 1-14, March.
    11. Alvey, James E., 2003. "Adam Smith'S Optimistic Teleological View Of History," Discussion Papers 23708, Massey University, Department of Applied and International Economics.
    12. Bart van Ark & Robert Inklaar & Robert H. McGuckin, 2002. "'Changing Gear' - Productivity, ICT and Services Industries: Europe and the United States," Economics Program Working Papers 02-02, The Conference Board, Economics Program.
    13. Erwin Diewert & Denis Lawrence, 1999. "Measuring New Zealand’s Productivity," Treasury Working Paper Series 99/05, New Zealand Treasury.
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