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The Productivity Paradox of the New Digital Economy

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  • Bart van Ark

Abstract

Despite a rapid increase in business spending on capital and services in Information and Communication Technology (ICT), the New Digital Economy (mobile technology, the internet, and cloud) has not yet generated any visible improvement in productivity growth. This article reviews the latest evidence for the United States, the United Kingdom and Germany. We find rapidly declining ICT prices, a shift from ICT investment to ICT services, and a continued increase in knowledge based-assets supporting ICT. However, the New Digital Economy is still in its “installation phase” and productivity effects may occur only once the technology enters the “deployment phase”.

Suggested Citation

  • Bart van Ark, 2016. "The Productivity Paradox of the New Digital Economy," International Productivity Monitor, Centre for the Study of Living Standards, vol. 31, pages 3-18, Fall.
    • Handle: RePEc:sls:ipmsls:v:31:y:2016:1
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    More about this item

    Keywords

    Productivity; Productivity Growth; Productivity Strategies; Information and Communcations Technology; Digital Economy;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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