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ICT productivity and firm propensity to innovative investment: learning effect evidence from italina micro data

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Author Info
Gianfranco Enrico Atzeni (University of Sassari & CRENoS)
Oliviero Antonio Carboni (University of Sassari & CRENoS)

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Abstract

This work attempts to shed light on the “information technology productivity paradox”. Employing a large data set of Italian manufacturing firms we compute ICT marginal productivity across different cluster of firms and the impact of information and communication technology (ICT) on output growth. Following Yorukoglu’s (1998) vintage capital idea, in which ICT is associated with consistent learning-by-doing effect, we explore whether firm capital replacement/introduction behaviour and firm’s technological investment aptitude have any role in explaining ICT productivity. We find that low capital replacement (high capital introduction) yields to sensibly greater ICT marginal revenues compared to high replacement (low capital introduction). However, what really matters in explaining ICT productivity is the level of innovation the new capital embodies. In fact, for non-innovative firms the ICT paradox is far less consistent. This strongly suggests the existence of learning by doing effects. In terms of growth contribution we find that ICT have an impact disproportionately wide compared to the share in total investment they represent

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Paper provided by EconWPA in its series Industrial Organization with number 0503012.

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Date of creation: 27 Mar 2005
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Handle: RePEc:wpa:wuwpio:0503012

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Related research
Keywords: Growth; investment behaviour; information and communication technologies; productivity; replacement;

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Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
O3 - Economic Development, Technological Change, and Growth - - Technological Change

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  1. Mehmet Yorukoglu, 1998. "The Information Technology Productivity Paradox," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 551-592, April. [Downloadable!] (restricted)
  2. Dale W. Jorgenson & Kevin J. Stiroh, 1999. "Information Technology and Growth," American Economic Review, American Economic Association, vol. 89(2), pages 109-115, May. [Downloadable!] (restricted)
  3. Nicholas Oulton, . "ICT and productivity growth in the United Kingdom," Bank of England working papers 140, Bank of England. [Downloadable!]
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  4. Matteo Bugamelli & Patrizio Pagano, 2001. "Barriers to investment in ICT," Temi di discussione (Economic working papers) 420, Bank of Italy, Economic Research Department. [Downloadable!]
    Other versions:
  5. Brynjolfsson, Erik. & Hitt, Lorin M., 1995. "Paradox lost? : firm-level evidence on the returns to information systems spending," Working papers 3786-95., Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
  6. Gordon, Robert J, 2000. "Does the 'New Economy' Measure up to the Great Inventions of the Past?," CEPR Discussion Papers 2607, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Greenman, N. & Mairesse, J., 1996. "Computers and Productivity in France: Some Evidence," Monash Econometrics and Business Statistics Working Papers 15/96, Monash University, Department of Econometrics and Business Statistics.
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  8. Catherine J. Morrison, 2000. "Assessing The Productivity Of Information Technology Equipment In U.S. Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 471-481, August. [Downloadable!] (restricted)
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  9. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, And The Demand For Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 339-376, February. [Downloadable!] (restricted)
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  10. Donald Siegel, 1997. "The Impact Of Computers On Manufacturing Productivity Growth: A Multiple-Indicators, Multiple-Causes Approach," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 68-78, February. [Downloadable!] (restricted)
  11. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: US Economic Growth in the Information Age," OECD Economics Department Working Papers 261, OECD, Economics Department. [Downloadable!]
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  12. Bahk, Byong-Hong & Gort, Michael, 1993. "Decomposing Learning by Doing in New Plants," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 561-83, August. [Downloadable!] (restricted)
  13. Berndt, Ernst R. & Morrison, Catherine J., 1992. "High-tech capital formation and economic performance in U.S. manufacturing industries : an exploratory analysis," Working papers 3419-92., Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
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  14. Boucekkine, Raouf & Germain, Marc & Licandro, Omar, 1997. "Replacement Echoes in the Vintage Capital Growth Model," Journal of Economic Theory, Elsevier, vol. 74(2), pages 333-348, June. [Downloadable!] (restricted)
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  15. Jacques Mairesse & Nathalie Greenan & Agnes Topiol-Bensaid, 2001. "Information Technology and Research and Development Impacts on Productivity and Skills: Looking for Correlations on French Firm Level Data," NBER Working Papers 8075, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Frank R. Lichtenberg, 1996. "The Output Contributions of Computer Equipment and Personnel: A Firm- Level Analysis," NBER Working Papers 4540, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. 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)
  18. Cooley, Thomas F. & Greenwood, Jeremy & Yorukoglu, Mehmet, 1997. "The replacement problem," Journal of Monetary Economics, Elsevier, vol. 40(3), pages 457-499, December. [Downloadable!] (restricted)
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  19. Erik Brynjolfsson & Lorin Hitt, 1997. "Information Technology as a Factor of Production: The Role of Differences Among Firms," Working Paper Series 201, MIT Center for Coordination Science. [Downloadable!]
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  20. Johanna Melka & Nanno Mulder & Laurence Nayman & Soledad Zignago, 2003. "Skills, Technology and Growth is ICT the Key to Success? An Analysis of ICT Impact on French Growth," Working Papers 2003-04, CEPII research center. [Downloadable!]
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