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Productivity and ICT: A Review of the Evidence

  • Mirko Draca
  • Raffaella Sadun
  • John Van Reenen

We survey the micro and macro literature on the impact of Information and Communication Technologies (ICTs) on productivity. The "Solow Paradox" of the absence of an impact of ICT on productivity no longer holds, if it ever did. Both growth accounting and econometric evidence suggest an important role for ICTs in accounting for productivity. In fact, the empirical estimates suggest a much larger impact of ICT on productivity than would be expected from the standard neoclassical model that we focus on. We discuss the various explanations for these results, including the popular notion of complementary organizational capital. Finally, we offer suggestions for where the literature needs to go.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0749.

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Date of creation: Aug 2006
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Handle: RePEc:cep:cepdps:dp0749
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