You Say You Want A Revolution: Information Technology and Growth

April 1, 2002

Preview Citation

Format: Chicago

James Morsink, and Markus Haacker. You Say You Want A Revolution: Information Technology and Growth, (USA: International Monetary Fund, 2002) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The information technology (IT) revolution has arrived, but how much will it change the world? It has been established that IT is contributing to labor productivity growth through both increases in the levels of IT capital per worker and total factor productivity (TFP) growth in the production of IT equipment. The main outstanding issue is whether IT is contributing to TFP growth more generally. Using data on IT expenditure and production for a broad sample of countries, we find a positive, large, and significant effect of IT expenditure on the acceleration in TFP in the late 1990s and a smaller-and significant-effect of IT production. We also find evidence that the impact of IT expenditure on TFP growth increases over time, suggesting that spillovers materialize gradually. Our results suggest that the increase in IT expenditure across industrial countries during 1995-2000 will eventually lead to an average increase in TFP growth of about one-third of 1 percent per year.

Subject: Capital productivity, Data processing, Economic and financial statistics, Labor productivity, Production, Productivity, Total factor productivity

Keywords: Beginning-of-period IT variable, Capital productivity, Coefficient estimate, Data processing, EDP expenditure, EDP production, Europe, Growth, Information technology, IT activity, IT capital deepening, IT expenditure, Labor productivity, Percent, Production, Productivity, Productivity gain, Technological change, TFP, Total factor productivity, WP

Publication Details

Pages:

19
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/070
Stock No:

WPIEA0702002
ISBN:

9781451849165
ISSN:

1018-5941

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