Does ICT boost Dutch productivity growth?

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Does ICT boost Dutch productivity growth?

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Henry van der Wiel ()

Abstract

From an historical and international perspective, Dutch labour productivity growth rates have been lacklustre. Using a growth accounting framework, this document analyses whether ICT has recently boosted Dutch labour productivity growth, similar to developments in the US.

Labour productivity growth in the Dutch market sector slightly accelerated in the second half of the 1990s. The acceleration seems to be related to the production and use of ICT. The productivity performance of the Dutch ICT sector accounts for a large share in the rebound of labour productivity growth. Strong productivity growth in the ICT sector is partly due to increased efficiency in the production of ICT products, particularly ICT services. Users of ICT benefit from its opportunities as well. Labour productivity growth rates markedly accelerated in ICT-intensive industries in the late 1990s.

The effect of ICT on Dutch labour productivity growth is not lower than that witnessed in other OECD countries (except for the US). Nevertheless, Dutch labour productivity grew slower than productivity in most other OECD countries because of lagging productivity growth rates, particularly in the services sector.

Due to slower growth rates of labour supply, Dutch labour productivity growth must increase in upcoming years in order to prevent a substantial decline in GDP growth. Labour productivity growth may be boosted by larger investments in and better use of ICT. The role of the government is mainly to facilitate the diffusion of ICT and other innovations across the economy, because these are the engines of economic growth. Based on studies for the US, one of the most efficient policy options seems to be creating a more competitive environment, which will cause firms to increase efficiency and to explore new ways of doing business.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Documents with number 16.

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Handle: RePEc:cpb:docmnt:16

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Find related papers by JEL classification:
C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General
O3 - Economic Development, Technological Change, and Growth - - Technological Change
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

This paper has been announced in the following NEP Reports:

NEP-ALL-2002-04-25 (All new papers)

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Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Chapters, in: Resource and Output Trends in the United States Since 1870, pages 1-23 National Bureau of Economic Research, Inc. [Downloadable!]
Marcel Canoy & Matthew Bennett & Paul de Bijl, . "Future Policy in Telecommunications: An Analytical Framework," CPB Documents 5, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
Bart van Ark, 2001. "The Renewal of the Old Economy: An International Comparative Perspective," OECD Science, Technology and Industry Working Papers 2001/5, OECD, Directorate for Science, Technology and Industry. [Downloadable!]
Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall. [Downloadable!] (restricted)

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