Definitions and Measures of ICT Impact on Growth: What is Really at Stake?
Many innovations have been introduced in national accounts in order to better gauge the information and communication technologies (ICT) diffusion impact: new ICT definitions; recognition of business and government software expenditures as fixed investment; hedonic price index. Nevertheless, there still does not exist any clear consensus about the magnitude of the ICT impact on growth. Our aim is to propose some explanations of this relative failure and also show that the debate should not be exclusively centered on quantitative methods. To this end, we take a close look at the two main questions concerning the debate surrounding the measure of the ICT impact: 1) Are there any substantial total factor productivity (TFP) gains generated by ICT diffusion or is it only a classic story of capital deepening increase ? 2) If there are indeed TFP gains, are they limited to ICT producers, as Robert J.Gordon claims, or is there any diffusion to ICT users ? The answer to the first question is really important only if it determines the length and the extent of an eventual growth cycle impulsed by ICT. The possibility that productivity gains mainly due to capital deepening generate strong and durable growth has been theoritically demonstrated by Greenwood and Jovanovic (1998), thanks to a vintage capital model. We precise the conditions under which this result can be obtained and discuss their empirical relevance. According to this approach, the true debate concerns the durability of the present technological shock, instead of its capacity to generate an autonomous technical progress. The answer to the second question is crucial because it could guide industrial policy choices. If TFP gains are limited to ICT producers, should a country always be an ICT producer, or will it anyway grow at a strong pace thanks to the fall of ICT prices ? The relevance of this economic debate is unfortunately poised by the shortcomings of available statistical tools. On one hand, the distinction between ICT users and producers is purely discretionary. On the other hand, TFP measure is completely distorted by the method used to evaluate the value of capital (cost-based prices against adjusted-quality prices). That is why we argue that the international diffusion of growth gains due to ICT essentially depends on the capacity of ICT producers' countries to stay in a rent keeping situation. The text is divided into two parts. The first one first makes a quick assessment of the adaptation of american national accounts to the " new economy ", and then underlines the limits of these changes. The second one shows that the economic debate on the importance of TFP gains acceleration and where they occur, although more complex because of these limits, can quite ignore them thanks to the implications of some endogeneous growth and international trade models.
|Date of creation:||2003|
|Contact details of provider:|| Postal: 69, quai d'Orsay - 75007 PARIS|
Phone: 01 44 18 54 00
Fax: 01 45 56 06 15
Web page: http://www.ofce.sciences-po.fr/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-361, May.
- William D. Nordhaus, 2000.
"Alternative Methods for Measuring Productivity Growth,"
Cowles Foundation Discussion Papers
1282, Cowles Foundation for Research in Economics, Yale University.
- William D. Nordhaus, 2001. "Alternative Methods for Measuring Productivity Growth," NBER Working Papers 8095, National Bureau of Economic Research, Inc.
- William D. Nordhaus, 2002.
"Productivity Growth and the New Economy,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 33(2), pages 211-265.
- William D. Nordhaus, 2001. "Productivity Growth and the New Economy," NBER Working Papers 8096, National Bureau of Economic Research, Inc.
- William D. Nordhaus, 2000. "Productivity Growth and the New Economy," Cowles Foundation Discussion Papers 1284, Cowles Foundation for Research in Economics, Yale University.
- MartinNeil Baily & Robert Z. Lawrence, 2001.
"Do We Have a New E-conomy?,"
American Economic Review,
American Economic Association, vol. 91(2), pages 308-312, May.
- Ralph Kozlow, 2000. "International Accounts Data Needs: Plans, Progress, and Priorities," BEA Papers 0009, Bureau of Economic Analysis.
- Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
- Griliches, Zvi, 1994.
"Productivity, R&D, and the Data Constraint,"
American Economic Review,
American Economic Association, vol. 84(1), pages 1-23, March.
- Jeremy Greenwood & Boyan Jovanovic, 1998.
"Accounting for Growth,"
NBER Working Papers
6647, National Bureau of Economic Research, Inc.
- Gordon, Robert J, 2000.
"Does the 'New Economy' Measure up to the Great Inventions of the Past?,"
CEPR Discussion Papers
2607, C.E.P.R. Discussion Papers.
- Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
- Robert J. Gordon, 2000. "Does the "New Economy" Measure up to the Great Inventions of the Past?," NBER Working Papers 7833, National Bureau of Economic Research, Inc.
- Brynjolfsson, Erik. & Hitt, Lorin M., 1995.
"Paradox lost? : firm-level evidence on the returns to information systems spending,"
3786-95., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Erik Brynjolfsson & Lorin Hitt, 1996. "Paradox Lost? Firm-Level Evidence on the Returns to Information Systems Spending," Management Science, INFORMS, vol. 42(4), pages 541-558, April.
- Kevin J. Stiroh, 2001. "Investing in information technology: productivity payoffs for U.S. industries," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 7(Jun).
- Bisciari, P., 2001.
14, Warwick - Development Economics Research Centre.
- William D. Nordhaus, 2000.
"New Data and Output Concepts for Understanding Productivity Trends,"
Cowles Foundation Discussion Papers
1286, Cowles Foundation for Research in Economics, Yale University.
- William D. Nordhaus, 2001. "New Data and Output Concepts for Understanding Productivity Trends," NBER Working Papers 8097, National Bureau of Economic Research, Inc.
- repec:dau:papers:123456789/4190 is not listed on IDEAS
- No authors listed, 2001. "New Economy," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 27(1), pages 1-1.
- Dale W. Jorgenson & Kevin J. Stiroh, 2000.
"Raising the Speed Limit: US Economic Growth in the Information Age,"
OECD Economics Department Working Papers
261, OECD Publishing.
- Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(1), pages 125-236.
- Jacques Mairesse & Gilbert Cette & Yussuf Kocoglu, 2000. "Les technologies de l'information et de la communication en France : diffusion et contribution à la croissance," Économie et Statistique, Programme National Persée, vol. 339(1), pages 117-146.
- Hélène Baudchon & Olivier Brossard, 2001. "Croissance et technologies de l'information en France et aux États-Unis," Revue de l'OFCE, Presses de Sciences-Po, vol. 76(1), pages 53-115.
When requesting a correction, please mention this item's handle: RePEc:fce:doctra:0301. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Francesco Saraceno)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.