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Accounting for Growth in the Information Age

In: Handbook of Economic Growth

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  • Jorgenson, Dale W.

Abstract

The "killer application" of the new framework for productivity measurement presented in this paper is the impact of information technology (IT) on economic growth. A consensus has emerged that the remarkable behavior of 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 [Schreyer, Paul (2000), "The contribution of information and communication technology to output growth: A study of the G7 Countries". Organization for Economic Co-operation and Development, Paris, May 23] 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 UK, 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.

Suggested Citation

  • Jorgenson, Dale W., 2005. "Accounting for Growth in the Information Age," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 10, pages 743-815 Elsevier.
  • Handle: RePEc:eee:grochp:1-10
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    Cited by:

    1. Garicano, Luis & Rossi-Hansberg, Esteban, 2012. "Organizing growth," Journal of Economic Theory, Elsevier, vol. 147(2), pages 623-656.
    2. Schwerdt, Guido & Turunen, Jarkko, 2010. "Labor quality growth in Germany," Economics Letters, Elsevier, vol. 108(3), pages 280-282, September.
    3. Belitz, Heike & Clemens, Marius & Gornig, Martin & Schiersch, Alexander & Schumacher, Dieter, 2010. "Wirtschaftsstrukturen, Produktiviät und Außenhandel im internationalen Vergleich," Studien zum deutschen Innovationssystem 5-2010, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    4. Sandro Mendonca, 2006. "The Revolution Within: Ict And The Shifting Knowledge Base Of The World'S Largest Companies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(8), pages 777-799.
    5. Xiao, Sheng & Zhao, Shan, 2012. "Financial development, government ownership of banks and firm innovation," Journal of International Money and Finance, Elsevier, vol. 31(4), pages 880-906.
    6. Thomas Strobel, 2010. "Institutions and Innovations as Sources of Productivity Growth Cross-Country Evidence," ifo Working Paper Series 87, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Jin, Hui & Jorgenson, Dale W., 2010. "Econometric modeling of technical change," Journal of Econometrics, Elsevier, vol. 157(2), pages 205-219, August.
    8. Guido Schwerdt & Jarkko Turunen, 2007. "Changes in Human Capital: Implications for Productivity Growth in the Euro Area," ifo Working Paper Series 53, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    9. Ceccobelli, M. & Gitto, S. & Mancuso, P., 2012. "ICT capital and labour productivity growth: A non-parametric analysis of 14 OECD countries," Telecommunications Policy, Elsevier, vol. 36(4), pages 282-292.
    10. Hulten, Charles R., 2010. "Growth Accounting," Handbook of the Economics of Innovation, Elsevier.
    11. Massimo Del Gatto & Adriana Di Liberto & Carmelo Petraglia, 2011. "Measuring Productivity," Journal of Economic Surveys, Wiley Blackwell, vol. 25(5), pages 952-1008, December.
    12. Adrian Peralta-Alva, 2007. "THE INFORMATION TECHNOLOGY REVOLUTION AND THE PUZZLING TRENDS IN TOBIN'S AVERAGE "q"," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 929-951, August.
    13. Oğuz, Fuat, 2013. "Universal service in Turkey: Recent developments and a critical assessment," Telecommunications Policy, Elsevier, vol. 37(1), pages 13-23.
    14. Onyimadu, Chukwuemeka, 2015. "A Case of Growth Without Development: A Comparative Study Between Nigeria and Malaysia," MPRA Paper 77202, University Library of Munich, Germany.
    15. Adriana Di Liberto & Francesco Pigliaru & Piergiorgio Chelucci, 2011. "International Tfp Dynamics And Human Capital Stocks: A Panel Data Analysis, 1960–2003," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(1), pages 156-182, March.
    16. Unel, Bulent, 2010. "Analyzing skilled and unskilled labor efficiencies in the US," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 957-967, December.
    17. Jorgenson, Dale W. & Jin, Hui & Slesnick, Daniel T. & Wilcoxen, Peter J., 2013. "An Econometric Approach to General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, Elsevier.
    18. Guido Schwerdt & Jarkko Turunen, 2007. "Growth In Euro Area Labor Quality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(4), pages 716-734, December.
    19. Alessandro Sterlacchini & Francesco Venturini, 2014. "R&D and Productivity in High-Tech Manufacturing: A Comparison between Italy and Spain," Industry and Innovation, Taylor & Francis Journals, vol. 21(5), pages 359-379, July.
    20. Thomas Strobel, 2010. "The Economic Impact of Capital-Skill Complementarities in German and US Industries Productivity Growth and the New Economy," ifo Working Paper Series 89, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    21. Aravena, Claudio & Villarreal, Francisco G. & Jofré, José, 2010. "Estimación de servicios de capital y productividad para América Latina," Estudios Estadísticos 68, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    22. Venturini, Francesco, 2015. "The modern drivers of productivity," Research Policy, Elsevier, vol. 44(2), pages 357-369.
    23. Smith, Kathryn, 2009. "Saving the World but Saving Too Much? Time Preference and Productivity in Climate Policy Modelling," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47619, Australian Agricultural and Resource Economics Society.

    More about this item

    JEL classification:

    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

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