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Productivity growth in UK industries, 1970-2000: structural change and the role of ICT

  • Nicholas Oulton
  • Sylaja Srinivasan

This paper uses a new industry-level dataset to quantify the roles of structural change and information and communication technology (ICT) in explaining productivity growth in the United Kingdom, 1970-2000. The dataset is for 34 industries covering the whole economy, of which 31 industries are in the market sector. Using growth accounting, we find that ICT capital accounted for 13% of productivity growth in the market sector in 1970-79 (ie 0.47 percentage points out of 3.62% per annum growth of GDP per hour), 26% in 1979-90, and 28% in 1990-2000. In 1995-2000 the proportion rises to 47%. ICT capital, despite only being a small fraction of the total capital stock, contributed as much to growth as non-ICT capital in 1990-2000 and getting on for twice as much in 1995-2000. Econometric evidence also supports an important role for ICT. Total factor productivity (TFP) growth slowed down in 1995-2000, but we find econometric evidence that a boom in 'complementary investment', ie expenditure on reorganisation that accompanies ICT investment but is not officially measured as investment, could have led to a decline in the conventional measure of TFP growth.

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Paper provided by Bank of England in its series Bank of England working papers with number 259.

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Date of creation: May 2005
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Handle: RePEc:boe:boeewp:259
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  11. Nicholas Oulton, 2000. "Must the growth rate decline? Baumol's unbalanced growth revisited," Bank of England working papers 107, Bank of England.
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  17. repec:cup:cbooks:9780521453455 is not listed on IDEAS
  18. Paul Schreyer, 2001. "The OECD Productivity Manual: A Guide to the Measurement of Industry-Level and Aggregate Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 2, pages 37-51, Spring.
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