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Do R&D and ICT Affect Total Factor Productivity Growth Differently?

Author

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  • Edquist, Harald

    (Ericsson Research)

  • Henrekson, Magnus

    (Research Institute of Industrial Economics (IFN))

Abstract

We analyze the effect of ICT and R&D on total factor productivity (TFP) growth across different industries in Sweden. R&D alone is significantly associated with contemporaneous TFP growth, thus exhibiting indirect effects. Although there is no significant short-run association between ICT and TFP, we find a positive association with a lag of seven to eight years. Thus, R&D affect TFP much faster than ICT-investments. We also divide ICT capital into hardware and software capital. To our knowledge, this distinction has not been made in any previous study analyzing TFP at the industry level. The results show that lagged hardware capital services growth is significantly associated with TFP growth. Hence, investments complementary to hardware are needed to reap the long-run TFP effects from reorganizing production.

Suggested Citation

  • 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 28 Nov 2016.
  • Handle: RePEc:hhs:iuiwop:1108
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    Cited by:

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    3. Jiao, Jianling & Jiang, Guili & Yang, Ranran, 2018. "Impact of R&D technology spillovers on carbon emissions between China’s regions," Structural Change and Economic Dynamics, Elsevier, vol. 47(C), pages 35-45.
    4. Edquist, Harald, 2021. "The Economic Impact of Mobile Broadband Speed," 23rd ITS Biennial Conference, Online Conference / Gothenburg 2021. Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world 238018, International Telecommunications Society (ITS).
    5. Andersson, Martin & Kusetogullari, Anna & Wernberg, Joakim, 2021. "Software development and innovation: Exploring the software shift in innovation in Swedish firms," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
    6. Hidemichi Fujii & Akihiko Shinozaki & Shigemi Kagawa & Shunsuke Managi, 2019. "How Does Information and Communication Technology Capital Affect Productivity in the Energy Sector? New Evidence from 14 Countries, Considering the Transition to Renewable Energy Systems," Energies, MDPI, Open Access Journal, vol. 12(9), pages 1-16, May.
    7. Zhang, Jiaping & Cheng, Mingwang & Yu, Ning, 2020. "Internet Use and Lower Life Satisfaction: The Mediating Effect of Environmental Quality Perception," Ecological Economics, Elsevier, vol. 176(C).
    8. Riccardo Pariboni & Pasquale Tridico, 2020. "Structural change, institutions and the dynamics of labor productivity in Europe," Journal of Evolutionary Economics, Springer, vol. 30(5), pages 1275-1300, November.
    9. Huang, Junbing & Cai, Xiaochen & Huang, Shuo & Tian, Sen & Lei, Hongyan, 2019. "Technological factors and total factor productivity in China: Evidence based on a panel threshold model," China Economic Review, Elsevier, vol. 54(C), pages 271-285.
    10. Kim, Keungoui & Bounfour, Ahmed & Nonnis, Alberto & Özaygen, Altay, 2021. "Measuring ICT externalities and their contribution to productivity: A bilateral trade based approach," Telecommunications Policy, Elsevier, vol. 45(2).
    11. Xinhai Lu & Danling Chen & Yue Wang, 2019. "Is Urban Sprawl Decoupled from the Quality of Economic Growth? Evidence from Chinese Cities," Sustainability, MDPI, Open Access Journal, vol. 12(1), pages 1-17, December.

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    More about this item

    Keywords

    ICT; R&D; Hardware; Software; Total factor productivity; Panel data analysis;
    All these keywords.

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • 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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