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The Swedish ICT Miracle - Myth or Reality

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  • Edquist, Harald

    ()
    (Dept. of Economics, Stockholm School of Economics)

Abstract

This paper investigates the relative labor productivity level for total manufacturing in Germany, Sweden and the US for the period 1980–2001. The paper also presents estimates of labor productivity levels for 18 different manufacturing industries for the period 1993–2000. The results show that the Swedish manufacturing productivity caught up with German and US productivity in the 1990s, overtaking the German level in 1995 and coming very close to the US level by the end of the 1990s. It has been argued that much of the Swedish surge in labor productivity during the second half of the 1990s was due to the spectacular growth of the Radio, television and communication equipment (RTC) (ISIC 32) industry. However, this paper shows that since 1998 Swedish RTC productivity has been declining relative to the corresponding industry in Germany and the US. Moreover, it is shown that the productivity growth of the ICT-producing industries is very sensitive to the value added price deflators used to calculate real value added growth rates. It is also shown that intermediate input prices have a large impact on the measured real value added growth for the Swedish Radio, television and communication equipment industry. It is argued that the accuracy of the price statistics for intermediate inputs is very uncertain for the Swedish Radio, television and communication equipment industry. Therefore estimates based on the US intermediate input price deflators suggest that the productivity growth of the Swedish Radio, television and communication equipment industry during the 1990s is partly a statistical artefact. This implies that the productivity growth of total manufacturing also has been overestimated.

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Bibliographic Info

Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 556.

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Length: 49 pages
Date of creation: 17 Feb 2004
Date of revision: 29 Mar 2004
Handle: RePEc:hhs:hastef:0556

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Keywords: Information and communication technology (ICT); Productivity; Technological change; Value added deflators;

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References

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  1. Paul Schreyer, 2001. "The OECD Productivity Manual: A Guide to the Measurement of Industry-Level and Aggregate Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 2, pages 37-51, Spring.
  2. Edquist, Harald & Henrekson, Magnus, 2002. "Kommer IKT-revolutionen även att lyfta Europas ekonomier?," Working Paper Series in Economics and Finance 497, Stockholm School of Economics.
  3. Stefano Scarpetta & Andrea Bassanini & Dirk Pilat & Paul Schreyer, 2000. "Economic Growth in the OECD Area: Recent Trends at the Aggregate and Sectoral Level," OECD Economics Department Working Papers 248, OECD Publishing.
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Cited by:
  1. Henrekson, Magnus & Edquist, Harald, 2006. "Technological Breakthroughs and Productivity Growth," Working Paper Series 665, Research Institute of Industrial Economics.
  2. Harald Edquist, 2010. "Does hedonic price indexing change our interpretation of economic history? Evidence from Swedish electrification," Economic History Review, Economic History Society, vol. 63(2), pages 500-523, 05.
  3. Kaitila, Ville, 2006. "Productivity, Hours Worked, and Tax/Benefit Systems in Europe and Beyond," Discussion Papers 1015, The Research Institute of the Finnish Economy.
  4. Elvio Mattioli e Giuseppe Ricciardo Lamonica, 2012. "Degree of integration and activation power of tourism in the European countries’ economies: an input-output analysis," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - Italian Review of Economics, Demography and Statistics, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 0(2), pages 57-72.
  5. Edquist, Harald, 2005. "Do hedonic price indexes change history? The case of electrification," Working Paper Series in Economics and Finance 586, Stockholm School of Economics, revised 28 Feb 2005.
  6. Gabriel Moser & Wolfgang Pointner & Gerhard Reitschuler, 2004. "Economic Growth in Denmark, Sweden and the United Kingdom since the Start of Monetary Union," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 53–66.
  7. Lars Jonung & Jaakko Kiander & Pentti Vartia, 2008. "The great financial crisis in Finland and Sweden - The dynamics of boom, bust and recovery, 1985-2000," European Economy - Economic Papers 350, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.

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