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Information Technology and the G7 Economies

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  • Dale W. Jorgenson

Abstract

A consensus has emerged that the remarkable behavior of Information Technology (IT) prices provides the key to the surge in U.S. economic growth after 1995. The relentless decline in the prices of information technology equipment and software has steadily enhanced the role of IT investment. Productivity growth in IT-producing industries has risen in importance and a productivity revival is underway in the rest of the economy. The surge of IT investment in the United States after 1995 has counterparts in all other industrialized countries. It is essential to use comparable data and methodology in order to provide rigorous international comparisons. A crucial role is played by measurements of IT prices. The U.S. national accounts have incorporated measures of IT prices that hold performance constant since 1985. Schreyer (2000) has extended these measures to other industrialized countries by constructing ?internationally harmonized prices?. The acceleration in the IT price decline in 1995 triggered a burst of IT investment in all of the G7 nations? Canada, France, Germany, Italy, Japan, the U.K., as well as the U.S. These countries also experienced a rise in productivity growth in the IT-producing industries. However, differences in the relative importance of these industries have generated wide disparities in the impact of IT on economic growth. The role of the IT-producing industries is greatest in the U.S., which leads the G7 in output per capita. JEL Classification: C82, D24, E23.

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  • Dale W. Jorgenson, 2006. "Information Technology and the G7 Economies," Revue de l'OFCE, Presses de Sciences-Po, vol. 97(5), pages 189-215.
    • Handle: RePEc:cai:reofsp:reof_073_0189
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    Cited by:

    1. Christophe Cahn & Arthur Saint-Guilhem, 2010. "Potential output growth in several industrialised countries a comparison," Empirical Economics, Springer, vol. 39(1), pages 139-165, August.
    2. Jones, Siôn & Jones, Pau, 2006. "e-Communications: Investment and the Regulatory Framework," MPRA Paper 3568, University Library of Munich, Germany.
    3. Zhang, Fan & Meng, Lei & Sun, Wen & Si, Yanwu, 2021. "Information technology and the labor market in China," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 156-168.
    4. Selahattin Imrohoroglu & Ayse Imrohoroglu & Kaiji Chen, 2006. "The Japanese Saving Rate," American Economic Review, American Economic Association, vol. 96(5), pages 1850-1858, December.
    5. Jorgenson, Dale W., 2005. "Les technologies de l’information et les économies du G7," L'Actualité Economique, Société Canadienne de Science Economique, vol. 81(1), pages 15-45, Mars-Juin.
    6. Oulton, Nicholas & Srinivasan, Sylaja, 2005. "Productivity growth and the role of ICT in the United Kingdom: an industry view, 1970-2000," LSE Research Online Documents on Economics 19901, London School of Economics and Political Science, LSE Library.
    7. Cette, Gilbert & Mairesse, Jacques & Kocoglu, Yusuf, 2005. "ICT diffusion and potential output growth," Economics Letters, Elsevier, vol. 87(2), pages 231-234, May.
    8. John R. Baldwin & Tarek M. Harchaoui, 2006. "The Integration of the Canadian Productivity Accounts within the System of National Accounts: Current Status and Challenges Ahead," NBER Chapters, in: A New Architecture for the US National Accounts, pages 439-470, National Bureau of Economic Research, Inc.
    9. Nicholas Oulton & Sylaja Srinivasan, 2005. "Productivity growth in UK industries, 1970-2000: structural change and the role of ICT," Bank of England working papers 259, Bank of England.
    10. Dirk Pilat & Paul Schreyer, 2004. "The OECD Productivity Database: An Overview," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 59-65, Spring.
    11. Nirvikar Singh, 2008. "Transaction costs, information technology and development," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 1(2), pages 212-236, September.
    12. Luca Guerrieri & Dale W. Henderson & Jinill Kim, 2005. "Investment-specific and multifactor productivity in multi-sector open economies: data and analysis," International Finance Discussion Papers 828, Board of Governors of the Federal Reserve System (U.S.).
    13. Dale W. Jorgenson, 2007. "Information Technology and the G7 Economies," NBER Chapters, in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 325-350, National Bureau of Economic Research, Inc.
    14. Mr. Marcello M. Estevão, 2004. "Why is Productivity Growth in the Euro Area so Sluggish?," IMF Working Papers 2004/200, International Monetary Fund.
    15. Dirk Pilat, 2005. "Canada's Productivity Performance in International Perspective," International Productivity Monitor, Centre for the Study of Living Standards, vol. 10, pages 24-44, Spring.
    16. Zelenyuk, Valentin, 2005. "Testing the impact of ICT in developed countries during 1980-1995: distributional analysis in Solow’s growth accounting framework," MPRA Paper 28029, University Library of Munich, Germany, revised Dec 2010.
    17. Gilbert Cette & Jimmy Lopez & Pierre-Alexandre Noual, 2005. "Investment in ICTs: an empirical analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 12(5), pages 309-312.
    18. Fernando Lera & Margarita Billón, 2004. "The North-South Digital Divide in Information and Communication Technologies Development: the Case for Spanish Regions," ERSA conference papers ersa04p307, European Regional Science Association.
    19. Melka, Johanna & Nayman, Laurence, 2005. "L’impact des nouvelles technologies de l’information sur la croissance française, 1980-2001," L'Actualité Economique, Société Canadienne de Science Economique, vol. 81(1), pages 75-110, Mars-Juin.
    20. Jake Kendall & Nirvikar Singh, 2006. "Internet Kiosks in Rural India: What Influences Success?," Working Papers 06-05, NET Institute, revised Sep 2006.
    21. PASHKEVICH, Volha & HAFTOR, Darek M. & PASHKEVICH, Natallia, 2021. "The information sector in Denmark and Sweden: Value, employment, wages," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    22. Liu, Ting-Kun & Chen, Jong-Rong & Huang, Cliff J. & Yang, Chih-Hai, 2014. "Revisiting the productivity paradox: A semiparametric smooth coefficient approach based on evidence from Taiwan," Technological Forecasting and Social Change, Elsevier, vol. 81(C), pages 300-308.

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    More about this item

    Keywords

    information technology; productivity; growth;
    All these keywords.

    JEL classification:

    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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