growth. 25 Others find that capital investment is the key instigator, which suggests that the productivity gains could be mostly a cyclical event and subside as interest-rates and the business cycle position change. 26 Others suggest that the capital deepening via computer equipment (that is, raising the share of ICT in the production of goods and services ) represents a step-up and permanent change in capital structure for firms inside and outside the sectors that actually produce this type of capital equipment; thus the step-up in trend productivity will not be reversed.
27 Finally—and perhaps most importantly—a new round of research has focused on the complementary changes in organizational behavior within the firm that is needed to fully benefit from the capital investment in the ICTs. Workers’ activities have to change, and how their activities within the firm have to change when ICTs enter the firm. When these organization changes are undertaken (which is not always the case in any firm), the combination of ICT investment and behavioral changes yields a more durable increase in trend labor and multi-factor productivity growth.
These changes in organizational behavior are often more difficult to achieve and can take longer to take root compared with simply buying computers (a point that we will see in the mini-case studies from APEC). 28 …and raises similar questions for other economies Researchers have been applying similar methods to data for other economies to see if ICTs have been as important for growth there. The general outcome of this research is that the US experience generally has not been replicated—Australia being an exception among APEC members. Examining research on other economies instructs on the ingredients necessary to mirror the US performance.
Simply describing the situation in other economies is challenging because of data needs. 29 But, once data are assembled, most research finds that the US behavior of productivity growth (labor or multi-factor) has not (yet) been replicated in other economies, although there is evidence of the process underway in Canada and Australia (among APEC members) and in 25 Jorgenson, Dale W. (2001).”Information Technology and the U.S. Economy,” The American Economic Review . 26 See Gordon, Robert. (2000). “Does the “New Economy” Measure Up to the Great Inventions of the Past?,” Journal of Economic Perspectives , vol 14 no.4, Fall 49-74.
Even Gordon admits in his latest analysis that much of the “cyclical” component captured by his time-varying parameter is sustainable. 27 Oliner, Stephen D., and Sichel, Daniel E. (2000). “Computers and Productivity,” The Journal of Economic Perspectives . Stiroh, Kevin J. (2001). New and Old Economics in the “New Economy”. Federal Reserve Bank, New York (9 April). Nordhaus, William D. 2001. Productivity Growth and the new Economy . NBER Working Paper Series 8096. Cambridge, MA: National Bureau of Economic Research. 28 Council of Economic Advisors, (2001) US Economic Report of the President. Government Printing Office: Washington.
Dunne, Timothy, Lucia, Foster, Haltiwanger, John, and Troske, Kenneth. (2000) Wage and Productivity Dispersion in the U.S. Manufacturing: The Role of Computer Investment. NBER Working Paper Series 7465. Cambridge, MA: National Bureau Economic Research. Brynjolfsson, Erik, and Hitt, Lorin M. (2000). Beyond Computation: Information Technology, Organizational Transformation and Business Performance, The Journal of Economic Perspectives 29 Scarpetta, Stefano, Bassanini, Andrea, Pilat, Dirk, and Schreyer, Paul. (2000). Economic Growth in the OECD Area: Recent Trends at the Aggregate and Sectoral Level. Economics Department Working Papers No. 248. Paris, France: OECD.
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