Status and outlook of the “New Economy” in selected EU member states from a German Viewpoint

The present study was conducted by the Ifo Department for Industry Branch Research and concluded in spring 2005. It was commissioned by the Federal Ministry of Economics and Labour. The study examines the status and outlook of the "New Economy" in Germany – also in comparison with five other member states of the European Union (France, Great Britain, Italy, the Netherlands and Sweden) – with regard to the diffusion and the effects of modern information and communication technology (ICT). The analysis uses a meso-economic, interdisciplinary method in which four industries are examined: mechanical engineering, motor vehicle construction, banking and distribution. On the basis of the available scientific literature on the "New Economy" a synopsis of previous results is presented. Together with Professor Jan-Egbert Sturm, University of Constance, the theoretical economic interdependencies, in particular the inexplicit assumptions, are revealed. With the aid of econometric estimation methods, different models are tested for the connection between the utilisation of ICT and the rise of labour productivity. This task was carried out by Cambridge Econometrics, a co-operation partner, with a disaggregated database according to sectors and countries. Using the results of qualitative analyses, expert interviews and surveys on the use of ICT investigations, the industry experts of the Ifo Institute provide final assessments for the individual industries. On the basis of these assessments, conclusions are drawn on the state of diffusion of ICT in Germany and its potential effects on productivity and growth.