Assessing The Productivity Of Information Technology Equipment In U.S. Manufacturing Industries
We assess the cost-reducing impacts of increasing stocks of "high-tech" equipment (O capital). Our empirical analysis is based on a dynamic production theory model and annual data for two-digit U.S. manufacturing industries (1952-1991). We find evidence of overinvestment in O capital in the mid to late 1980s, following a period of strong investment incentives in the late 1970s. By the end of the 1980s, however, the returns to investment and falling prices for O capital more than justified the high investment levels in nondurable-goods industries, and the benefit-cost ratio was also increasing for durable-goods industries. The underlying substitution patterns suggest that high-tech capital expansion increases demand for most capital and noncapital inputs overall, but saves on materials inputs. In durables industries, however, both energy and "other" capital appear somewhat substitutable with O capital, and in nondurables industries increasing high-tech intensity may be a factor underlying stagnating labor demand. © 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
Volume (Year): 79 (2000)
Issue (Month): 3 (August)
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- Martin Neil Baily & Robert J. Gordon, 1988. "The Productivity Slowdown, Measurement Issues, and the Explosion of Computer Power," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 347-432.
- Dudley, L. & Lasserre, P., 1986.
"Information As Substitute for Inventories,"
Cahiers de recherche
8643, Universite de Montreal, Departement de sciences economiques.
- Lester C. Thurow, 1987. "Economic Paradigms and Slow American Productivity Growth," Eastern Economic Journal, Eastern Economic Association, vol. 13(4), pages 333-343, Oct-Dec.
- Paul Osterman, 1986. "The Impact of Computers on the Employment of Clerks and Managers," ILR Review, Cornell University, ILR School, vol. 39(2), pages 175-186, January.
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