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Technological Breakthroughs and Productivity Growth

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Abstract

This study consists of an examination of productivity growth following three major technological breakthroughs: the steam power revolution, electrification and the ICT revolution. The distinction between sectors producing and sectors using the new technology is emphasized. A major finding for all breakthroughs is that there is a long lag from the time of the original invention until a substantial increase in the rate of productivity growth can be observed. There is also strong evidence of rapid price decreases for steam engines, electricity, electric motors and ICT products. However, there is no persuasive direct evidence that the steam engine producing industry and electric machinery had particularly high productivity growth rates. For the ICT revolution the highest productivity growth rates are found in the ICT-producing industries. We suggest that one explanation could be that hedonic price indexes are not used for the steam engine and the electric motor. Still, it is likely that the rate of technological development has been much more rapid during the ICT revolution compared to any of the previous breakthroughs.

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Paper provided by Stockholm School of Economics in its series SSE/EFI Working Paper Series in Economics and Finance with number 0562.

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Length: 63 pages
Date of creation: 24 Aug 2004
Date of revision: 04 Apr 2005
Publication status: Published in Research in Economic History, 2006, pages 43.
Handle: RePEc:hhs:hastef:0562
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Keywords: electrification; general purpose technologies; ICT revolution; productivity growth; steam power; Technological breakthroughs;

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Find related papers by JEL classification:
  • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
  • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
  • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
  • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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Cited by:

  1. Edquist, Harald & Henrekson, Magnus, 2013. "Product Market Reforms and Incentives to Innovate in Sweden," Working Paper Series 986, Research Institute of Industrial Economics.
  2. Szalavetz, Andrea, 2011. "Innovációvezérelt növekedés?
    [Innovation-driven growth?]    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 460-476.
  3. Jalava, Jukka & Pohjola, Matti, 2008. "The roles of electricity and ICT in economic growth: Case Finland," Explorations in Economic History, Elsevier, vol. 45(3), pages 270-287, July.
  4. Edquist, Harald, 2005. "Do hedonic price indexes change history? The case of electrification," SSE/EFI Working Paper Series in Economics and Finance 586, Stockholm School of Economics, revised 28 Feb 2005.
  5. Edquist, Harald & Henrekson, Magnus, 2016. "Do R&D and ICT Affect Total Factor Productivity Growth Differently?," Working Paper Series 1108, Research Institute of Industrial Economics, revised 07 Jun 2016.
  6. Edquist, Harald, 2008. "Does Hedonic Price Indexing Change Our Interpretation of Economic History? Evidence from Swedish Electrification," Working Paper Series 742, Research Institute of Industrial Economics, revised 03 Sep 2009.
  7. Lee, Minkyu & Heshmati, Almas, 2006. "A Dynamic Flexible Partial-Adjustment Model of International Diffusion of the Internet," Ratio Working Papers 99, The Ratio Institute.
  8. Delmar, Frédéric & Wennberg, Karl & Hellerstedt, Karin, 2011. "Endogenous growth through knowledge spillovers in entrepreneurship: An empirical test," Ratio Working Papers 165, The Ratio Institute.
  9. van Ark, Bart & Smits, Jan Pieter, 2005. "Technology Regimes and Productivity Growth in Europe and the United States: A Comparative and Historical Perspective," Institute of European Studies, Working Paper Series qt1td1h23k, Institute of European Studies, UC Berkeley.
  10. Edquist, Harald & Henrekson, Magnus, 2015. "Swedish Lessons: How Important are ICT and R&D to Economic Growth?," Working Paper Series 1073, Research Institute of Industrial Economics, revised 25 Aug 2015.
  11. Pearson, Peter J.G. & Foxon, Timothy J., 2012. "A low carbon industrial revolution? Insights and challenges from past technological and economic transformations," Energy Policy, Elsevier, vol. 50(C), pages 117-127.

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