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ICT, innovation and the e-economy

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Author Info

  • Brynjolfsson, Erik

    ()
    (Massachusetts Institute of Technology (MIT))

Abstract

The revival in US productivity growth since the mid-1990s is linked to a surge in investment in information and communication technologies (ICT). Against the backdrop of a weakening link between productivity and traditional innovation inputs (e.g. R&D expenditure), digitization has spurred productivity through innovations in management techniques, business models, work processes and human resource practices. More fundamentally, digitization is changing the way innovation itself is done, opening the prospect of a long-term increase in the overall rate of innovation. Over time, this will dwarf the benefits from any particular innovation. Digitization is transforming innovation in four ways: 1) improved real-time measurement of business activities; 2) faster and cheaper business experimentation; 3) more widespread and easier sharing of ideas; and 4) the ability to replicate innovations more quickly and more accurately. This mutually reinforcing sequence amounts to a new kind of R&D, with far-reaching implications for public policy.

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Bibliographic Info

Paper provided by European Investment Bank, Economics Department in its series EIB Papers with number 8/2011.

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Length: 17 pages
Date of creation: 21 Dec 2011
Date of revision:
Handle: RePEc:ris:eibpap:2011_008

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Related research

Keywords: ICT; digitization; Internet; e-economy; innovation; R&D;

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References

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  1. Bloom, Nicholas & Sadun, Raffaella & Van Reenen, John, 2007. "Americans Do I.T. Better: US Multinationals and the Productivity Miracle," CEPR Discussion Papers 6291, C.E.P.R. Discussion Papers.
  2. Tanya S. Rosenblat & Markus M. Mobius, 2004. "Getting Closer or Drifting Apart?," The Quarterly Journal of Economics, MIT Press, vol. 119(3), pages 971-1009, August.
  3. Griffith, Rachel & Lee, Sokbae & Van Reenen, John, 2007. "Is Distance Dying at Last? Falling Home Bias in Fixed Effects Models of Patent Citations," CEPR Discussion Papers 6435, C.E.P.R. Discussion Papers.
  4. Kevin J. Stiroh, 2001. "Information technology and the U.S. productivity revival: what do the industry data say?," Staff Reports 115, Federal Reserve Bank of New York.
  5. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2004. "Will the U.S. productivity resurgence continue?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 10(Dec).
  6. Claudia Goldin & Lawrence F. Katz, 2008. "Transitions: Career and Family Life Cycles of the Educational Elite," American Economic Review, American Economic Association, vol. 98(2), pages 363-69, May.
  7. Brynjolfsson, Erik & Smith, Michael D. & Yu, (Jeffrey) Hu, 2003. "Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers," Working papers 4305-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
  8. Sah, Raaj Kumar & Stiglitz, Joseph E, 1986. "The Architecture of Economic Systems: Hierarchies and Polyarchies," American Economic Review, American Economic Association, vol. 76(4), pages 716-27, September.
  9. Brynjolfsson, Erik, 2013. "Wired for Innovation: How Information Technology Is Reshaping the Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262518611, December.
  10. Heidi L. Williams, 2010. "Intellectual Property Rights and Innovation: Evidence from the Human Genome," NBER Working Papers 16213, National Bureau of Economic Research, Inc.
  11. Alex (Sandy) Pentland, 2008. "Honest Signals: How They Shape Our World," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262162563, December.
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Citations

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Cited by:
  1. Dan Andrews & Chiara Criscuolo, 2013. "Knowledge-Based Capital, Innovation and Resource Allocation," OECD Economics Department Working Papers 1046, OECD Publishing.
  2. Hyytinen, Ari & Maliranta, Mika, 2013. "Firm lifecycles and evolution of industry productivity," Research Policy, Elsevier, vol. 42(5), pages 1080-1098.

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