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Australian Use of Information Technology and its Contribution to Growth

Author

Listed:
  • John Simon

    (Reserve Bank of Australia)

  • Sharon Wardrop

    (Reserve Bank of Australia)

Abstract

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.

Suggested Citation

  • John Simon & Sharon Wardrop, 2002. "Australian Use of Information Technology and its Contribution to Growth," RBA Research Discussion Papers rdp2002-02, Reserve Bank of Australia.
  • Handle: RePEc:rba:rbardp:rdp2002-02
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    File URL: http://www.rba.gov.au/publications/rdp/2002/pdf/rdp2002-02.pdf
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    References listed on IDEAS

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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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    Cited by:

    1. Engelbrecht, Hans-Jurgen & Xayavong, Vilaphonh, 2006. "ICT intensity and New Zealand's productivity malaise: Is the glass half empty or half full?," Information Economics and Policy, Elsevier, vol. 18(1), pages 24-42, March.
    2. Burak Karagöl & Erkan Erdil, 2012. "Macroeconomic Effects of Information and Communication Technologies in Turkey and Other OECD Member Countries," STPS Working Papers 1205, STPS - Science and Technology Policy Studies Center, Middle East Technical University, revised May 2012.
    3. Tim Bulman & John Simon, 2003. "Productivity and Inflation," RBA Research Discussion Papers rdp2003-10, Reserve Bank of Australia.
    4. Yuan K. Chou, 2002. "The Australian Growth Experience (1960-2000): R&D-Based, Human Capital-Based, Or Just Steady State Growth?," Department of Economics - Working Papers Series 855, The University of Melbourne.
    5. Chee Kong Wong, 2004. "Information Technology, Productivity and Economic Growth in China," Economics Discussion / Working Papers 04-21, The University of Western Australia, Department of Economics.
    6. Matthew D Shapiro, 2003. "Has the rate of economic growth changed? Evidence and lessons for public policy," Reserve Bank of New Zealand Discussion Paper Series DP2003/07, Reserve Bank of New Zealand.

    More about this item

    Keywords

    Australia; growth accounting; information technology; productivity;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • 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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