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Decomposing Productivity Growth in the U.S. Computer Industry


  • Chun, H.
  • Nadiri, M.I.


In this paper, we examine the sources of the productivity growth in the U.S. computer industry from 1978 to 1999. We estimate a joint production model of output quantity and quality that distinguishes two types of technological changes: process and product innovations. Based on the estimation results, we decompose total factor productivity (TFP) growth rate into the contributions of process and product innovations and scale economies. The results show that product innovation associated with better quality accounts for about 30 percent of the TFP growth in the computer industry. Furthermore, we find that the TFP acceleration in the computer industry in the late 1990s is mainly derived from a rapid increase in product innovation.

Suggested Citation

  • Chun, H. & Nadiri, M.I., 2002. "Decomposing Productivity Growth in the U.S. Computer Industry," Working Papers 02-04, C.V. Starr Center for Applied Economics, New York University.
  • Handle: RePEc:cvs:starer:02-04

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    References listed on IDEAS

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    Cited by:

    1. Mirko Draca & Raffaella Sadun & John Van Reenen, 2006. "Productivity and ICT: A Review of the Evidence," CEP Discussion Papers dp0749, Centre for Economic Performance, LSE.
    2. Rodrigo Cifuentes & Jorge Desormeaux, 2005. "Monetary policy and financial integration: the case of Chile," BIS Papers chapters,in: Bank for International Settlements (ed.), Globalisation and monetary policy in emerging markets, volume 23, pages 109-23 Bank for International Settlements.
    3. Benedetti Fasil, Cristiana & Borota, Teodora, 2013. "World trade patterns and prices: The role of productivity and quality heterogeneity," Journal of International Economics, Elsevier, vol. 91(1), pages 68-81.
    4. Hidemichi Fujii & Kazuma Edamura & Koichi Sumikura & Yoko Furusawa & Naomi Fukuzawa & Shunsuke Managi, 2015. "How enterprise strategies are related to innovation and productivity change: an empirical study of Japanese manufacturing firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 24(3), pages 248-262, April.
    5. Catherine Mann, 2011. "Information Technology, Globalization, and Growth: Role for Scale Economies, Terms of Trade, and Variety," Working Papers 27, Brandeis University, Department of Economics and International Businesss School.
    6. BEN YOUSSEF, Adel & M'HENNI, Hatem, 2003. "Les effets des technologies de l'information et de communication sur la croissance économique; le cas de la Tunisie
      [ICT contribution to growth; the case of tunisia]
      ," MPRA Paper 27537, University Library of Munich, Germany.
    7. Chun, Hyunbae & Kim, Jung-Wook & Morck, Randall & Yeung, Bernard, 2008. "Creative destruction and firm-specific performance heterogeneity," Journal of Financial Economics, Elsevier, vol. 89(1), pages 109-135, July.
    8. Chun, Hyunbae & Kim, Jung-Wook & Lee, Jason, 2015. "How does information technology improve aggregate productivity? A new channel of productivity dispersion and reallocation," Research Policy, Elsevier, vol. 44(5), pages 999-1016.
    9. Khayyat, Nabaz T. & Lee, Jongsu & Lee, Jeong-Dong, 2014. "How ICT Investment Influences Energy Demand in South Korea and Japan?," MPRA Paper 55454, University Library of Munich, Germany.
    10. Subal Kumbhakar & Kai Sun, 2012. "Estimation of TFP growth: a semiparametric smooth coefficient approach," Empirical Economics, Springer, vol. 43(1), pages 1-24, August.
    11. Hyunbae Chun & Jung-Wook Kim & Jason Lee & Randall Morck, 2004. "Patterns of Comovement: The Role of Information Technology in the U.S. Economy," NBER Working Papers 10937, National Bureau of Economic Research, Inc.
    12. Hyunbae Chun & Jung-Wook Kim & Randall Morck, 2011. "Varying Heterogeneity among U.S. Firms: Facts and Implications," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 1034-1052, August.
    13. Geuna, Aldo & Nesta, Lionel J.J., 2006. "University patenting and its effects on academic research: The emerging European evidence," Research Policy, Elsevier, vol. 35(6), pages 790-807, July.

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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