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ICT, Reallocation and Productivity

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  • Eric J. Bartelsman

Abstract

This paper starts by reviewing medium- to long-term growth prospects provided in recent academic and policy research. The paper argues that, owing to the on-going advances in ICT, much higher growth is technologically feasible, but that a considerable amount of churn and reallocation across firms in the market sector. Next, the paper presents evidence on recent patterns of reallocation in EU countries. Based on theoretical findings from heterogeneous firm dynamics models, the paper will describe how various types of policy could affect the processes of allocation and selection and thereby growth prospects. Finally, the paper will combine empirical and theoretical insights to point towards promising policy directions. Conditional on the policy environment, labor productivity growth in the EU of 2.5 percent per year for the next 20-30 years appears attainable.

Suggested Citation

  • Eric J. Bartelsman, 2013. "ICT, Reallocation and Productivity," European Economy - Economic Papers 2008 - 2015 486, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  • Handle: RePEc:euf:ecopap:0486
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    File URL: http://ec.europa.eu/economy_finance/publications/economic_paper/2013/ecp486_en.htm
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    Cited by:

    1. Cette, Gilbert & Fernald, John & Mojon, Benoît, 2016. "The pre-Great Recession slowdown in productivity," European Economic Review, Elsevier, vol. 88(C), pages 3-20.
    2. Juan F. Jimeno, 2015. "Long-lasting consequences of the European crisis," Working Papers 1522, Banco de España;Working Papers Homepage.
    3. Matthias Figo & Peter Mayerhofer, 2015. "Strukturwandel und regionales Wachstum - wissensintensive Unternehmensdienste als Wachstumsmotor?," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 145, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    4. repec:wfo:wstudy:58503 is not listed on IDEAS
    5. 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.

    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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