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ICT productivity and firm propensity to innovative investment: learning effect evidence from italian micro data

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  • G. Atzeni

    ()

  • O. Carboni

    ()

Abstract

This work attempts to shed light on the “information technology productivity paradox”. Employing a large data set of Italian manufacturing firms we compute ICT marginal productivity across different cluster of firms and the impact of information and communication technology (ICT) on output growth. Following Yorukoglu’s (1998) vintage capital idea, in which ICT is associated with consistent learning-by-doing effect, we explore whether firm capital replacement/introduction behaviour and firm’s technological investment aptitude have any role in explaining ICT productivity. We find that low capital replacement (high capital introduction) yields to sensibly greater ICT marginal revenues compared to high replacement (low capital introduction). However, what really matters in explaining ICT productivity is the level of innovation the new capital embodies. In fact, for non-innovative firms the ICT paradox is far less consistent. This strongly suggests the existence of learning by doing effects. In terms of growth contribution we find that ICT have an impact disproportionately wide compared to the share in total investment they represent.

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Bibliographic Info

Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 200414.

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Date of creation: 2004
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Handle: RePEc:cns:cnscwp:200414

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Keywords: growth; investment behaviour; information and communication technologies; productivity; replacement;

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References

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  1. Gordon, Robert J, 2000. "Does the 'New Economy' Measure up to the Great Inventions of the Past?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2607, C.E.P.R. Discussion Papers.
  2. Nicholas Oulton, 2001. "ICT and productivity growth in the United Kingdom," Bank of England working papers, Bank of England 140, Bank of England.
  3. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
  4. Matteo Bugamelli & Patrizio Pagano, 2004. "Barriers to investment in ICT," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(20), pages 2275-2286.
  5. Bahk, Byong-Hong & Gort, Michael, 1993. "Decomposing Learning by Doing in New Plants," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(4), pages 561-83, August.
  6. Alfonso Gambardella & Salvatore Torrisi, 2001. "Nuova industria o nuova economia? L'impatto dell'informatica sulla produttivitˆ dei settori manifatturieri in Italia," Moneta e Credito, Economia civile, Economia civile, vol. 54(213), pages 39-76.
  7. Berndt, Ernst R. & Morrison, Catherine J., 1995. "High-tech capital formation and economic performance in U.S. manufacturing industries An exploratory analysis," Journal of Econometrics, Elsevier, Elsevier, vol. 65(1), pages 9-43, January.
  8. Brynjolfsson, Erik. & Hitt, Lorin M., 1995. "Paradox lost? : firm-level evidence on the returns to information systems spending," Working papers, Massachusetts Institute of Technology (MIT), Sloan School of Management 3786-95., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  9. Cooley, Thomas F. & Greenwood, Jeremy & Yorukoglu, Mehmet, 1997. "The replacement problem," Journal of Monetary Economics, Elsevier, Elsevier, vol. 40(3), pages 457-499, December.
  10. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 14(4), pages 23-48, Fall.
  11. Nathalie Greenana & Jacques Mairesse, 2000. "Computers And Productivity In France: Some Evidence," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(3), pages 275-315.
  12. Donald Siegel, 1997. "The Impact Of Computers On Manufacturing Productivity Growth: A Multiple-Indicators, Multiple-Causes Approach," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 68-78, February.
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  14. Boucekkine, R. & Germain, M. & Licandro, O., . "Replacement echoes in the vintage capital growth model," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1275, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. Catherine J. Morrison, 2000. "Assessing The Productivity Of Information Technology Equipment In U.S. Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 471-481, August.
  16. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
  17. Mehmet Yorukoglu, 1998. "The Information Technology Productivity Paradox," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 551-592, April.
  18. Erik Brynjolfsson & Lorin Hitt, 1997. "Information Technology as a Factor of Production: The Role of Differences Among Firms," Working Paper Series, MIT Center for Coordination Science 201, MIT Center for Coordination Science.
  19. Johanna Melka & Nanno Mulder & Laurence Nayman & Soledad Zignago, 2003. "Skills, Technology and Growth is ICT the Key to Success ? An Analysis of ICT Impact on French Growth," Working Papers, CEPII research center 2003-04, CEPII research center.
  20. Jacques Mairesse & Nathalie Greenan & Agnes Topiol-Bensaid, 2001. "Information Technology and Research and Development Impacts on Productivity and Skills: Looking for Correlations on French Firm Level Data," NBER Working Papers 8075, National Bureau of Economic Research, Inc.
  21. Kevin J. Stiroh & Dale W. Jorgenson, 1999. "Information Technology and Growth," American Economic Review, American Economic Association, American Economic Association, vol. 89(2), pages 109-115, May.
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