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Its Not What You Make, Its How You Use IT: Measuring the Welfare Benefits of the IT Revolution Across Countries

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  • Tamim Bayoumi
  • Markus Haacker

Abstract

This paper analyzes the welfare benefits from falling relative prices of IT (information technology) goods across a wide range of countries. We find, using two separate methodologies and datasets, that welfare benefits mainly accrue to users of IT, not their producers, because of falling relative prices. This is important, as IT production and use are highly differentiated across countries, and implies that earlier work on how IT production affects real GDP, while useful in calibrating the overall benefits of the IT revolution, are a less valuable way of assessing the distribution of benefits.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0548.

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Date of creation: Sep 2002
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Handle: RePEc:cep:cepdps:dp0548

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  1. Paul Schreyer, 2000. "The Contribution of Information and Communication Technology to Output Growth: A Study of the G7 Countries," OECD Science, Technology and Industry Working Papers 2000/2, OECD Publishing.
  2. Bart van Ark, 2001. "The Renewal of the Old Economy: An International Comparative Perspective," OECD Science, Technology and Industry Working Papers 2001/5, OECD Publishing.
  3. Kevin J. Stiroh, 2001. "Information technology and the U.S. productivity revival: what do the industry data say?," Staff Reports 115, Federal Reserve Bank of New York.
  4. Robert J. Gordon, 2000. "Does the "New Economy" Measure up to the Great Inventions of the Past?," NBER Working Papers 7833, National Bureau of Economic Research, Inc.
  5. Sue Fernie & Helen Gray, 2002. "It's a family affair: the effect of union recognition and human resource management on the provision of equal opportunities in the UK," LSE Research Online Documents on Economics 20089, London School of Economics and Political Science, LSE Library.
  6. Martin Brookes & Zaki Wahhaj, 2001. "Is the Internet Better than Electricity?," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(2), pages 53-72, April.
  7. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455, October.
  8. Stephen J Nickell & Stephen Redding & Joanna Swaffield, 2002. "Educational attainment, labour market institutions, and the structure of production," LSE Research Online Documents on Economics 3706, London School of Economics and Political Science, LSE Library.
  9. Brynjolfsson, Erik. & Hitt, Lorin M., 1994. "Information technology as a factor of production : the role of differences among firms," Working papers 3715-94. CCSTR ; #173., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  10. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: US Economic Growth in the Information Age," OECD Economics Department Working Papers 261, OECD Publishing.
  11. Crafts, Nicholas, 2002. "The Solow Productivity Paradox in Historical Perspective," CEPR Discussion Papers 3142, C.E.P.R. Discussion Papers.
  12. Erik Brynjolfsson, 1994. "Some Estimates of the Contribution of Information Technology to Consumer Welfare," Working Paper Series 161, MIT Center for Coordination Science.
  13. Dirk Pilat & Frank C. Lee, 2001. "Productivity Growth in ICT-producing and ICT-using Industries: A Source of Growth Differentials in the OECD?," OECD Science, Technology and Industry Working Papers 2001/4, OECD Publishing.
  14. Karl Whelan, 2000. "A guide to the use of chain aggregated NIPA data," Finance and Economics Discussion Series 2000-35, Board of Governors of the Federal Reserve System (U.S.).
  15. C. Knick Harley, 1998. "Cotton Textile Prices and the Industrial Revolution," Economic History Review, Economic History Society, vol. 51(1), pages 49-83, 02.
  16. Jacques Mairesse & Gilbert Cette & Yussuf Kocoglu, 2000. "Les technologies de l'information et de la communication en France : diffusion et contribution à la croissance," Économie et Statistique, Programme National Persée, vol. 339(1), pages 117-146.
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Cited by:
  1. Nicholas Crafts, 2004. "The world economy in the 1990s: a long run perspective," Economic History Working Papers 22334, London School of Economics and Political Science, Department of Economic History.
  2. Parham, Dean, 2005. "Les gains de productivité au moyen de l’usage des technologies de l’information : l’expérience australienne," L'Actualité Economique, Société Canadienne de Science Economique, vol. 81(1), pages 143-164, Mars-Juin.
  3. Tamim Bayoumi & Hali Edison, 2003. "Is Wealth Increasingly Driving Consuption?," DNB Staff Reports (discontinued) 101, Netherlands Central Bank.
  4. Richard Nahuis & Henry van der Wiel, 2005. "How Should Europe's ICT Ambitions look like? An Interpretative Review of the Facts," Working Papers 05-22, Utrecht School of Economics.
  5. Niek Nahuis & Ben Geurts, 2004. "Helping thy neighbour: productivity, welfare and international trade," International Trade 0404008, EconWPA.
  6. Catherine L. Mann, 2012. "Information Technology Intensity, Diffusion, and Job Creation," Working Papers 46, Brandeis University, Department of Economics and International Businesss School.
  7. Nicholas Crafts, 2004. "Social savings as a measure of the contribution of a new technology to economic growth," Economic History Working Papers 22554, London School of Economics and Political Science, Department of Economic History.

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