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ICT, innovation and the e-economy

Author

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  • Brynjolfsson, Erik

    () (Massachusetts Institute of Technology (MIT))

Abstract

The revival in US productivity growth since the mid-1990s is linked to a surge in investment in information and communication technologies (ICT). Against the backdrop of a weakening link between productivity and traditional innovation inputs (e.g. R&D expenditure), digitization has spurred productivity through innovations in management techniques, business models, work processes and human resource practices. More fundamentally, digitization is changing the way innovation itself is done, opening the prospect of a long-term increase in the overall rate of innovation. Over time, this will dwarf the benefits from any particular innovation. Digitization is transforming innovation in four ways: 1) improved real-time measurement of business activities; 2) faster and cheaper business experimentation; 3) more widespread and easier sharing of ideas; and 4) the ability to replicate innovations more quickly and more accurately. This mutually reinforcing sequence amounts to a new kind of R&D, with far-reaching implications for public policy.

Suggested Citation

  • Brynjolfsson, Erik, 2011. "ICT, innovation and the e-economy," EIB Papers 8/2011, European Investment Bank, Economics Department.
  • Handle: RePEc:ris:eibpap:2011_008
    as

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    References listed on IDEAS

    as
    1. Brynjolfsson, Erik, 2013. "Wired for Innovation: How Information Technology Is Reshaping the Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262518611, January.
    2. Heidi L. Williams, 2013. "Intellectual Property Rights and Innovation: Evidence from the Human Genome," Journal of Political Economy, University of Chicago Press, vol. 121(1), pages 1-27.
    3. Tanya S. Rosenblat & Markus M. Mobius, 2004. "Getting Closer or Drifting Apart?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 971-1009.
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    5. Sah, Raaj Kumar & Stiglitz, Joseph E, 1986. "The Architecture of Economic Systems: Hierarchies and Polyarchies," American Economic Review, American Economic Association, vol. 76(4), pages 716-727, September.
    6. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2004. "Will the U.S. productivity resurgence continue?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 10(Dec).
    7. Nicholas Bloom & Raffaella Sadun & John Van Reenen, 2012. "Americans Do IT Better: US Multinationals and the Productivity Miracle," American Economic Review, American Economic Association, vol. 102(1), pages 167-201, February.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Bauer, Johannes M., 2014. "Platforms, systems competition, and innovation: Reassessing the foundations of communications policy," Telecommunications Policy, Elsevier, vol. 38(8), pages 662-673.
    2. Hyytinen, Ari & Maliranta, Mika, 2013. "Firm lifecycles and evolution of industry productivity," Research Policy, Elsevier, vol. 42(5), pages 1080-1098.
    3. Dan Andrews & Chiara Criscuolo, 2013. "Knowledge-Based Capital, Innovation and Resource Allocation," OECD Economics Department Working Papers 1046, OECD Publishing.

    More about this item

    Keywords

    ICT; digitization; Internet; e-economy; innovation; R&D;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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