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The Swedish ICT miracle -- myth or reality?

Listed author(s):
  • Edquist, Harald

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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File URL: http://www.sciencedirect.com/science/article/pii/S0167-6245(04)00055-1
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Article provided by Elsevier in its journal Information Economics and Policy.

Volume (Year): 17 (2005)
Issue (Month): 3 (July)
Pages: 275-301

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Handle: RePEc:eee:iepoli:v:17:y:2005:i:3:p:275-301
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505549

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  1. Edquist, Harald, 2005. "The Swedish ICT miracle -- myth or reality?," Information Economics and Policy, Elsevier, vol. 17(3), pages 275-301, July.
  2. Stephen D. Oliner & Daniel E. Sichel, 2000. "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 3-22, Fall.
  3. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
  4. Eliasson, Gunnar, 2004. "Ignorant Actors in the Resource Rich World of the Knowledge Based Economy - On Rational Management in an Experimentally Organized Economy (EOE)," Ratio Working Papers 47, The Ratio Institute.
  5. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
  6. repec:dgr:rugggd:200260 is not listed on IDEAS
  7. Ark, Bart van & Inklaar, Robert & McGuckin, Robert, 2002. ""Changing gear" : productivity, ICT and services: Europe and the United States," GGDC Research Memorandum 200260, Groningen Growth and Development Centre, University of Groningen.
  8. 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.
  9. repec:dgr:rugggd:200472 is not listed on IDEAS
  10. Dan Johansson, 2004. "Is small beautiful? The case of the Swedish IT industry," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 16(4), pages 271-287, July.
  11. Edquist, Harald & Henrekson, Magnus, 2002. "Kommer IKT-revolutionen även att lyfta Europas ekonomier?," SSE/EFI Working Paper Series in Economics and Finance 497, Stockholm School of Economics.
  12. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
  13. Jalava, Jukka & Pohjola, Matti, 2002. "Economic growth in the New Economy: evidence from advanced economies," Information Economics and Policy, Elsevier, vol. 14(2), pages 189-210, June.
  14. 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.
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