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It's Not What You Make, It's How You Use IT: Measuring the Welfare Benefits of the IT Revolution Across Countries

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  • Bayoumi, Tamim
  • Haacker, Markus

Abstract

This Paper analyses the welfare benefits from falling relative prices of IT (Information Technology) goods across a wide range of countries. Using two separate methodologies and datasets, we find that welfare benefits mainly accrue to users of IT, not their producers, because of falling relative prices. This is important, as IT production and use are highly differentiated across countries, and implies that earlier work on how IT production affects real GDP, while useful in calibrating the overall benefits of the IT revolution, are a less valuable way of assessing the distribution of benefits.

Suggested Citation

  • Bayoumi, Tamim & Haacker, Markus, 2002. "It's Not What You Make, It's How You Use IT: Measuring the Welfare Benefits of the IT Revolution Across Countries," CEPR Discussion Papers 3555, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3555
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Elaine Ramsey & Derek Bond, 2007. "Evaluating Public Policy Formation and Support Mechanisms for Technological Innovation," International Review of Applied Economics, Taylor & Francis Journals, vol. 21(3), pages 403-418.
    2. repec:spr:infosf:v:14:y:2012:i:4:d:10.1007_s10796-011-9326-9 is not listed on IDEAS
    3. Crafts, Nicholas, 2004. "Social savings as a measure of the contribution of a new technology to economic growth," Economic History Working Papers 22554, London School of Economics and Political Science, Department of Economic History.
    4. Niek Nahuis & Ben Geurts, 2004. "Helping thy neighbour: productivity, welfare and international trade," International Trade 0404008, EconWPA.
    5. R. Nahuis & H. van der Wiel, 2005. "How Should Europe’s ICT Ambitions look like? An Interpretative Review of the Facts," Working Papers 05-22, Utrecht School of Economics.
    6. Francesco Venturini, 2009. "The long-run impact of ICT," Empirical Economics, Springer, vol. 37(3), pages 497-515, December.
    7. Parham, Dean, 2005. "Les gains de productivité au moyen de l’usage des technologies de l’information : l’expérience australienne," L'Actualité Economique, Société Canadienne de Science Economique, vol. 81(1), pages 143-164, Mars-Juin.
    8. Tamim Bayoumi & Hali Edison, 2003. "Is Wealth Increasingly Driving Consuption?," DNB Staff Reports (discontinued) 101, Netherlands Central Bank.
    9. Brainerd, Elizabeth & Menon, Nidhiya, 2014. "Seasonal effects of water quality: The hidden costs of the Green Revolution to infant and child health in India," Journal of Development Economics, Elsevier, vol. 107(C), pages 49-64.
    10. Catherine L. Mann, 2012. "Information Technology Intensity, Diffusion, and Job Creation," Working Papers 46, Brandeis University, Department of Economics and International Businesss School.
    11. Crafts, Nicholas, 2004. "The world economy in the 1990s: a long run perspective," Economic History Working Papers 22334, London School of Economics and Political Science, Department of Economic History.

    More about this item

    Keywords

    information technology; technological change; terms of trade; welfare benefits;

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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