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Does ICT Investment Matter for Growth and Labor Productivity in Transition Economies?


  • Marcin Piatkowski


Following up on a previous paper by the same author on the contribution of ICT capital to growth and labor productivity in Poland 1995-2000, this paper extends the study to eight transition economies: Bulgaria, Czech Republic, Hungary, Poland, Russia, Slovakia and Slovenia. The paper shows that the contribution of investment in IT hardware, software and telecommunication equipment to output growth and labor productivity between 1995 and 2000 in most countries featured in the study was much higher than what might be expected on the basis of the level of their GDP per capita. This may suggest that the transition economies – through the use of ICT - are benefiting from the technological leapfrogging to increase the growth rates in output and labor productivity and hence accelerate the process of catching-up. The relatively large contribution of ICT capital to output growth and labor productivity is due to an extraordinary acceleration in real ICT investments, which were growing between 1995 and 2000 at an average rate of more than 20% a year for almost all countries in the study. Large investments in ICT seem to have been induced by (i) falling prices of ICT products and services, which encouraged companies to substitute ICT for non-ICT capital and (ii) an opportunity for higher-than-normal returns on ICT investments due to a large pent-up demand for ICT infrastructure, a legacy of decapitalization and technological gap existing before 1989.

Suggested Citation

  • Marcin Piatkowski, 2004. "Does ICT Investment Matter for Growth and Labor Productivity in Transition Economies?," Development and Comp Systems 0402008, EconWPA.
  • Handle: RePEc:wpa:wuwpdc:0402008
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    References listed on IDEAS

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    9. Marcin Piatkowski, 2003. "The Contribution of ICT Investment to Economic Growth and Labor Productivity in Poland 1995-2000," Development and Comp Systems 0308002, EconWPA.
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    Cited by:

    1. Bart van Ark & Marcin Piatkowski, 2004. "Productivity, innovation and ICT in Old and New Europe," International Economics and Economic Policy, Springer, vol. 1(2), pages 215-246, January.
    2. Samoilenko, Sergey & Osei-Bryson, Kweku-Muata, 2008. "An exploration of the effects of the interaction between ICT and labor force on economic growth in transition economies," International Journal of Production Economics, Elsevier, vol. 115(2), pages 471-481, October.
    3. Piatkowski, Marcin, 2004. "The Impact of ICT on Growth in Transition Economies," MPRA Paper 29399, University Library of Munich, Germany.
    4. Dana Hajkova, 2008. "The Measurement of Capital Services in the Czech Republic," Working Papers 2008/11, Czech National Bank, Research Department.

    More about this item


    economic growth; post-communist countries; information technology; growth accounting;

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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