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Barriers to investment in ICT

  • Matteo Bugamelli

    ()

    (Bank of Italy, Economic Research Department)

  • Patrizio Pagano

    ()

    (Bank of Italy, Economic Research Department)

We investigate the diffusion of information and communication technologies (ICT) in Italian manufacturing using microdata. We find a positive correlation at firm level between ICT investment, human capital of the labor force and reorganization. Starting from row data, we build a measure of ICT capital stock, which includes hardware, software and communication equipment, showing a delay in ICT accumulation with respect to US manufacturing, in 1997, of about 8 years. We use this measure to estimate a production function. The elasticity of value added to ICT capital turns out to be close to 4 per cent, which implies an ICT marginal product much higher than its user cost. We argue that this can be explained by the presence of barriers to ICT investment such as the low level of human capital and the lack of reorganization of the firm.

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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 420.

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Date of creation: Oct 2001
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Handle: RePEc:bdi:wptemi:td_420_01
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