IDEAS home Printed from https://ideas.repec.org/p/zbw/zewdip/11083.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/54976/1/684263343.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert Inklaar, 2010. "The Sensitivity Of Capital Services Measurement: Measure All Assets And The Cost Of Capital," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(2), pages 389-412, June.
    2. Nicholas Oulton, 2007. "Ex Post Versus Ex Ante Measures Of The User Cost Of Capital," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(2), pages 295-317, June.
    3. Mary O'Mahony & Marcel P. Timmer, 2009. "Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database," Economic Journal, Royal Economic Society, vol. 119(538), pages 374-403, June.
    4. Robert Inklaar & Mary O'Mahony & Marcel Timmer, 2005. "ICT AND EUROPE's PRODUCTIVITY PERFORMANCE: INDUSTRY‐LEVEL GROWTH ACCOUNT COMPARISONS WITH THE UNITED STATES," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(4), pages 505-536, December.
    5. Oulton, Nicholas, 2012. "Long term implications of the ICT revolution: Applying the lessons of growth theory and growth accounting," Economic Modelling, Elsevier, vol. 29(5), pages 1722-1736.
    6. Andrea Bassanini & Stefano Scarpetta, 2002. "Growth, Technological Change, and ICT Diffusion: Recent Evidence from OECD Countries," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 324-344.
    7. Paul Schreyer, 2002. "Computer Price Indices and International Growth and Productivity Comparisons," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(1), pages 15-31, March.
    8. Alessandra Colecchia & Paul Schreyer, 2002. "ICT Investment and Economic Growth in the 1990s: Is the United States a Unique Case? A Comparative Study of Nine OECD Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(2), pages 408-442, April.
    9. Nicholas Oulton & Ana Rincon-Aznar, 2009. "Rates of Return and Alternative Measures of Capital Input: 14 Countries and 10 Branches, 1971-2005," CEP Discussion Papers dp0957, Centre for Economic Performance, LSE.
    10. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2005. "Productivity, Volume 3: Information Technology and the American Growth Resurgence," MIT Press Books, The MIT Press, edition 1, volume 3, number 0262101114, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thomas Niebel & Marianne Saam, 2016. "ICT and Growth: The Role of Rates of Return and Capital Prices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(2), pages 283-310, June.
    2. Oulton, Nicholas, 2012. "Long term implications of the ICT revolution: Applying the lessons of growth theory and growth accounting," Economic Modelling, Elsevier, vol. 29(5), pages 1722-1736.
    3. Oulton, Nicholas & Wallis, Gavin, 2015. "Integrated estimates of capital stocks and services for the United Kingdom: 1950-2013," LSE Research Online Documents on Economics 61697, London School of Economics and Political Science, LSE Library.
    4. Oulton, Nicholas & Wallis, Gavin, 2016. "Capital stocks and capital services: Integrated and consistent estimates for the United Kingdom, 1950–2013," Economic Modelling, Elsevier, vol. 54(C), pages 117-125.
    5. Nicholas Oulton & Ana Rincón-Aznar, 2012. "Rates of Return and Alternative Measures of Capital Input: 14 Countries and Ten Branches, 1971–2005," Chapters, in: Matilde Mas & Robert Stehrer (ed.), Industrial Productivity in Europe, chapter 10, Edward Elgar Publishing.
    6. Mary O'Mahony & Marcel P. Timmer, 2009. "Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database," Economic Journal, Royal Economic Society, vol. 119(538), pages 374-403, June.
    7. Nicholas Oulton, 2013. "Medium and long run prospects for UK growth in the aftermath of the financial crisis," Discussion Papers 1307, Centre for Macroeconomics (CFM).
    8. Mariela Dal Borgo & Peter Goodridge & Jonathan Haskel & Annarosa Pesole, 2013. "Productivity and Growth in UK Industries: An Intangible Investment Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(6), pages 806-834, December.
    9. Francesco Daveri, 2002. "The New Economy in Europe, 1992--2001," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 345-362.
    10. repec:dgr:rugggd:gd-115 is not listed on IDEAS
    11. Thomas Niebel & Mary O'Mahony & Marianne Saam, 2017. "The Contribution of Intangible Assets to Sectoral Productivity Growth in the EU," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63, pages 49-67, February.
    12. Liao, Hailin & Wang, Bin & Li, Baibing & Weyman-Jones, Tom, 2016. "ICT as a general-purpose technology: The productivity of ICT in the United States revisited," Information Economics and Policy, Elsevier, vol. 36(C), pages 10-25.
    13. Theo S. Eicher & Oliver Roehn, 2007. "Sources of the German Productivity Demise: Tracing the Effects of Industry‐Level Information and Communication Technology Investment," German Economic Review, Verein für Socialpolitik, vol. 8(2), pages 211-236, May.
    14. Dirk Bursian & Arne J. Nagengast, 2020. "Offshoring And The Polarization Of The Demand For Capital," Economic Inquiry, Western Economic Association International, vol. 58(1), pages 260-282, January.
    15. Nicholas Crafts & Pieter Woltjer, 2021. "Growth Accounting In Economic History: Findings, Lessons And New Directions," Journal of Economic Surveys, Wiley Blackwell, vol. 35(3), pages 670-696, July.
    16. Dale W. Jorgenson & Marcel P. Timmer, 2011. "Structural Change in Advanced Nations: A New Set of Stylised Facts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 1-29, March.
    17. Ceccobelli, M. & Gitto, S. & Mancuso, P., 2012. "ICT capital and labour productivity growth: A non-parametric analysis of 14 OECD countries," Telecommunications Policy, Elsevier, vol. 36(4), pages 282-292.
    18. Oliver Roehn & Theo Eicher & Thomas Strobel, 2007. "The Ifo Industry Growth Accounting Database," CESifo Working Paper Series 1915, CESifo.
    19. Eric Bartelsman & Eva Hagsten & Michael Polder, 2018. "Micro Moments Database for cross‐country analysis of ICT, innovation, and economic outcomes," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(3), pages 626-648, September.
    20. Nicholas Oulton & Ana Rincon-Aznar, 2009. "Rates of Return and Alternative Measures of Capital Input: 14 Countries and 10 Branches, 1971-2005," CEP Discussion Papers dp0957, Centre for Economic Performance, LSE.
    21. Molinari, Benedetto & Rodríguez, Jesús & Torres, José L., 2013. "Growth and technological progress in selected Pacific countries," Japan and the World Economy, Elsevier, vol. 28(C), pages 60-71.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:11083. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zemande.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.