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Americans Do I.T. Better: US Multinationals and the Productivity Miracle

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Author Info
Nick Bloom
Raffaella Sadun
John Van Reenen

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Abstract

The US has experienced a sustained increase in productivity growth since the mid-1990s, particularly in sectorsthat intensively use information technologies (IT). This has not occurred in Europe. If the US "productivitymiracle" is due to a natural advantage of being located in the US then we would not expect to see any evidenceof it for US establishments located abroad. This paper shows in fact that US multinationals operating in the UKdo have higher productivity than non-US multinationals in the UK, and this is primarily due to the higherproductivity of their IT. Furthermore, establishments that are taken over by US multinationals increase theproductivity of their IT, whereas observationally identical establishments taken over by non-US multinationalsdo not. One explanation for these patterns is that US firms are organized in a way that allows them to use newtechnologies more efficiently. A model of endogenously chosen organizational form and IT is developed toexplain these new micro and macro findings.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0788.

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Date of creation: Apr 2007
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Handle: RePEc:cep:cepdps:dp0788

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Related research
Keywords: Productivity; Information Technology; multinationals; organization;

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Find related papers by JEL classification:
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
O3 - Economic Development, Technological Change, and Growth - - Technological Change
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Laura Abramovsky & Rachel Griffith, 2009. "ICT, corporate restructuring and productivity," IFS Working Papers W09/10, Institute for Fiscal Studies. [Downloadable!]
  2. Silvio Contessi & Ariel Weinberger, 2009. "Foreign direct investment, productivity, and country growth: an overview," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 61-78. [Downloadable!]
  3. Nick Bloom & Christos Genakos & Ralf Martin & Raffaella Sadun, 2008. "Modern Management: Good for the Environment or Just Hot Air?," CEP Discussion Papers dp0891, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  4. Davide Castellani & Giorgia Giovannetti, 2009. "Productivity and the international firm: dissecting heterogeneity," Development Working Papers 270, Centro Studi Luca d\'Agliano, University of Milano. [Downloadable!]
  5. Jaan Masso & Priit Vahter, 2008. "Technological Innovation And Productivity In Late-Transition Estonia: Econometric Evidence From Innovation Surveys," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 61, Faculty of Economics and Business Administration, University of Tartu (Estonia). [Downloadable!]
    Other versions:
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