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Does the New Economy Create Higher Productivity?


  • Mogens Dilling-Hansen

    (School of Business Administration, University of Aarhus)

  • Erik Strøjer Madsen

    (The Aarhus School of Business)

  • Valdemar Smith

    (The Aarhus School of Business)


The rapid and continuous growth in the US in the 1990s and the simultaneous boom in the IT industry created the concept "The New Economy". What connects the two phenomena is that the IT industry alone is considered productive, and increased productivity in other industries, as a result of increased IT use, has brought focus on the IT industry as a catalyst for growth.The Danish Ministry of Finance (2001) points out general increased productivity in Denmark at macro level and this increase is said to be a result of increased IT use. The question is, however, if the influence of IT investments really can be verified. The strongest evidence would be to show that this relationship exists at micro level. The purpose of this article is to investigate whether it is possible to detect increased productivity in the late 1990s, using data from Danish industries for the first time.The result of this analysis shows increased productivity in the IT industry starting in 1993. IT in production counts for increased but stagnated growth, whereas IT in the service industries has seen rapidly increasing productivity.

Suggested Citation

  • Mogens Dilling-Hansen & Erik Strøjer Madsen & Valdemar Smith, 2002. "Does the New Economy Create Higher Productivity?," CIE Discussion Papers 2002-10, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  • Handle: RePEc:kud:kuieci:2002-10

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    References listed on IDEAS

    1. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 339-376.
    2. Dilling-Hansen, M. & Eriksson, T. & Madsen, E.S. & Smith, V., 1999. "The Influence of Competition and Ownership Structure on the Performance of Sanish Manufacturing Firms," Papers 99-9, Aarhus School of Business - Department of Economics.
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    More about this item


    Productivity; New Economy;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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