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ICT Intermediates, Growth and Productivity SpilloversEvidence from Comparison of Growth Effects inGerman and US Manufacturing Sectors

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  • Thomas Strobel

Abstract

Recent pre-crisis growth accounting exercises attribute strong productivity growth toincreased investments in information and communication technologies (ICT), especiallyduring the mid-1990s. EU-wide stylized facts about a growing US–EU productivity gapare confirmed for Germany, particularly showing no substantially economy-wide effectsfrom ICT for German sectors. Tracing the effect from ICT during the period 1991–2005,this study takes a different view by expanding the concept of value added to gross output,additionally including different types of intermediate inputs. The findings suggest thatimported intermediate inputs played a more dominating role in Germany than in the US,particularly imported non-ICT and ICT materials, although domestically-produced ICTmaterials were important as well. In the US, main driving forces were domesticallyproducednon-ICT services and ICT materials, even though imported ICT materialswere on the upraise post 1995. Moreover, there were decisive differences is countries’TFP growth rates with about twice the size in the US. According to robust econometricanalysis there have been strong spillover effects from increasing domestically-producedICT materials in German TFP growth, while for the US TFP growth originated fromincreasing imported ICT materials. It will be argued that these different productivityeffects stem from different functions of ICT in the production process. However, TFPgrowth differentials between Germany and the US during 1991 to 2000 are explained toa great extent by strong US TFP growth in the Electrical & Electronic Machinery sector.

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Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number ifo Working Paper No. 123.

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Date of creation: 2012
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Handle: RePEc:ces:ifowps:_123

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Related research

Keywords: Industry productivity growth; information and communication technology; intermediate inputs; growth accounting; technology spillovers;

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References

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  1. Francesco Caselli & Daniel Wilson, 2002. "Importing technology," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  2. Ian Dew-Becker & Robert J. Gordon, 2008. "The Role of Labor Market Changes in the Slowdown of European Productivity Growth," NBER Working Papers 13840, National Bureau of Economic Research, Inc.
  3. Hiroyuki Kasahara & Joel Rodrigue, 2005. "Does the Use of Imported Intermediates Increase Productivity? Plant-Level Evidence," University of Western Ontario, Economic Policy Research Institute Working Papers 20057, University of Western Ontario, Economic Policy Research Institute.
  4. Van Biesebroeck, Johannes, 2008. "The Sensitivity of Productivity Estimates," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 311-328.
  5. Hans-Werner Sinn, 2005. "Basar-Ökonomie Deutschland - Exportweltmeister oder Schusslicht?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 58(06), pages 03-42, 03.
  6. Norihiko Yamano & Nadim Ahmad, 2006. "The OECD Input-Output Database: 2006 Edition," OECD Science, Technology and Industry Working Papers 2006/8, OECD Publishing.
  7. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  8. Pinelopi Goldberg & Amit Khandelwal & Nina Pavcnik & Petia Topalova, 2009. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," Working Papers 1179, Princeton University, Department of Economics, Center for Economic Policy Studies..
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