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Australian Use of Information Technology and its Contribution to Growth

Listed author(s):
  • John Simon

    (Reserve Bank of Australia)

  • Sharon Wardrop

    (Reserve Bank of Australia)

This paper investigates the gains from the use of information technology in Australia during the 1990s using a growth accounting framework. We make use of new industry-level estimates of the productive capital stock. Our analysis suggests that Australia has done well out of the ‘new economy’. Its use of computer technology is amongst the highest in the world with Australian business investment in computer and related equipment growing rapidly since the early 1990s. Computer use has not been uniform throughout the economy but concentrated in more service-oriented sectors such as telecommunications, and finance and insurance. Additionally, we find that around one-half of the gains from the use of information technology can be attributed to price falls while the other half can be attributed to higher nominal expenditure. We arrive at the conclusion that Australia has experienced significant output growth related to computer use and has benefited from the technological advances in the sector through lower prices passed on to users. Thus, we conclude that there are substantial benefits to be gained from being a net user of computers as well as the more commonly mentioned benefits from being a producer.

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Paper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp2002-02.

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Date of creation: Jan 2002
Handle: RePEc:rba:rbardp:rdp2002-02
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  1. 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.
  2. Hasan Bakhshi & Jens Larsen, 2001. "Investment-specific technological progress in the United Kingdom," Bank of England working papers 129, Bank of England.
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