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Productivity of ICT and non-ICT capital: The role of rates of return and capital prices

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  • Niebel, Thomas
  • Saam, Marianne

Abstract

We investigate the role rates of return and rates of asset price decline play in explaining sources of productivity growth in the context of a growth accounting approach. Our analysis is based on data from the EU KLEMS database for seven countries in the period of 1990 - 2007. We introduce a constant rate of return to capital and a constant rate of ICT price decline across sectors, countries and time. The main result of this sensitivity analysis is that both alternative measurements somewhat downplay the role investment played relative to growth in multi-factor productivity in the UK and the US during 1995 - 2000. Moreover, we show that more than half of the ICT contribution to labor productivity growth results from growth in capital quality and composition rather than quantity.

Suggested Citation

  • Niebel, Thomas & Saam, Marianne, 2011. "Productivity of ICT and non-ICT capital: The role of rates of return and capital prices," ZEW Discussion Papers 11-083, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:11083
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    References listed on IDEAS

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    Cited by:

    1. Felix Roth & Anna-Elisabeth Thum, 2022. "Intangible Capital and Labor Productivity Growth: Panel Evidence for the EU from 1998–2005," Contributions to Economics, in: Intangible Capital and Growth, chapter 0, pages 101-128, Springer.
    2. Felix Roth, 2022. "Revisiting Intangible Capital and Labor Productivity Growth, 2000–2015: Accounting for the Crisis and Economic Recovery in the EU," Contributions to Economics, in: Intangible Capital and Growth, chapter 0, pages 17-42, Springer.

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    More about this item

    Keywords

    ICT capital; asset prices; rates of return; growth accounting;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • 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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