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Estimating the impact of the Internet of Things on productivity in Europe

Author

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  • Espinoza, Héctor
  • Kling, Gerhard
  • McGroarty, Frank
  • O'Mahony, Mary
  • Ziouvelou, Xenia

Abstract

The Internet of Things (IoT) refers to interconnected devices and objects that collect and transmit data via the Internet. The IoT is an evolving technology, promising to revolutionise industries, but also demanding far-reaching policy changes (e.g. in terms of data security and privacy), which involve significant resources. This paper reviews the evidence on uptake and the economic impact of the IoT during its early years of inception. It uses a growth accounting framework to evaluate the likely impact of the IoT on productivity. Estimating the effect of new technologies on productivity is an essential step in evaluating the ‘economic value-added’, justifying resources dedicated to facilitating the adoption of innovations. We find a positive impact of the IoT on productivity, however relatively small, given that the IoT is still at an early stage of development. We present projections on the impact of the IoT under a number of scenarios.

Suggested Citation

  • Espinoza, Héctor & Kling, Gerhard & McGroarty, Frank & O'Mahony, Mary & Ziouvelou, Xenia, 2020. "Estimating the impact of the Internet of Things on productivity in Europe," LSE Research Online Documents on Economics 116391, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:116391
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    References listed on IDEAS

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    Cited by:

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    2. Junping Yang & Ruiqi Wu & Haochun Yang, 2023. "Digital Transformation and Enterprise Sustainability: The Moderating Role of Regional Virtual Agglomeration," Sustainability, MDPI, vol. 15(9), pages 1-21, May.

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    More about this item

    Keywords

    business; economics; evaluation of new technology; growth accounting; impact; industry; information science; Internet of Things; productivity;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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