ICT and Productivity - relations and dynamics in a spatial context

The strong emergence of ICT in the past decades was accompanied by much research on the potential productivity boosting qualities of ICT: high productivity growth was expected. However, empirical evidence on the productivity impact of ICT stayed behind: the Solow paradox. Since then analytical steps were made by using alternative indicators for both ICT adoption and productivity and including longer time periods, distinctions in types of economic activities and adding micro level and firm specific characteristics like size, age, and intensity of innovation. Moreover, ICT was linked to network relations including externalities. These adaptations led to outcomes in favour of a positive relation between the use of ICT and productivity. However, most convincing in this debate was the finding that the effects of ICT on economic performance should be analysed from a perspective which, besides ICT, includes changes in knowledge and organisations. Knowledge is defined here broadly and includes both codified and tacit knowledge. In this paper we focus on the trinity ‘ICT, knowledge and organization’ and add the regional dimension to this. Based on economic literature our hypothesis is that regions where firms increasingly use ICT show a stronger growth of added value and productivity. This positive relationship is, however, co-determined by changes in the broadly defined knowledge level. The use of ICT by firms is analysed at different levels of urbanism in the Netherlands. Most central is the distinction between the metropolitan Randstad, the intermediate zone and the national periphery. By this regional distinction the debate on the centrifugal and centripetal effects of ICT (the death of distance) is included. The empirical measurement as such is based on the low spatial scale of 496 municipalities.