At least as important, evidence from the US and Australia points to changes in work organization and methods, which impact the labor market. Most authors, in comparing the US and Australia with other industrial economies, conclude that the industrial economies that employ less ICT capital must have a less complementary environment for the needed changes in organizational behavior within firms and resource reallocations across plants that appear to be a key component of the US and Australian experience. 35 The OECD as well has found a positive correlation between ICT investments and adoption of new workplace practices.
36 While these analyses do not prove the point, it appears that policies that allow flexible entry and exit of firms and movement of labor around the economy are key for the New Economy successes that have not been emulated or replicated elsewhere. 37 ICTs are the fad now, but research on productivity growth goes back a long way. The current spate of research, much of which has focused on the US and on the role for ICT capital per se, should be placed within the rich and extensive literature that investigates more broadly the trends and cyclical dynamics of labor productivity and multi-factor productivity.
Researchers have investigated how the level of productivity is affected by resource reallocation across industries, R&D spending, capital deepening, and trade patterns. 38 This previous research has implications for the recommendations on innovation systems in the KBE report. Initially, much of this work used long time series, focusing on aggregate data on productivity for an economy. 39 More recently, however, researchers have focused on increasing the range of included variables, and using shorter time series but more disaggregated industry or even firm-level data. 40 35 Gust, Christopher, and Marquez, Jaime. 2000. op. cit. Bassanini, Andrea, Scarpetta, Stefano, and Visco, Ignazio. 2000.
Knowledge, Technology and Economic Growth: Recent Evidence from OECD Countries. Economics Department Working Paper Series No. 259. Paris, France: OECD. See Gruen op. cit. for Australia Treasury, op. cit. For a different view on the EU see Roeger, Werner. 2001. op. cit. 36 OECD (2001) The New Economy: Beyond the Hype (Executive Summary), esp. pp 15-17 and Figure 6. 37 See generally OECD (2001), The New Economy: Beyond the Hype. 38 Navaretti, Giorgio Barba, and Tarr, David G. 2000. International Knowledge Flows and Economic Performance: A Review of the Evidence. The World Bank Economic Review 14, No. 1: 1-15. 39 Basu, Susanto (1996), "Procyclical Productivity:
Increasing Returns or Cyclical Utilization," Quarterly Journal of Economics, August , p.719-751. Basu, Susanto and John Fernald (1997), "Aggregate Productivity and Aggregate Technology," manuscript, Federal Reserve Board, February. Bils, Mark (1992), "Measuring Returns to Scale from Shift Practices in Manufacturing," manuscript, University of Rochester. Burnside, Craig, Martin Eichenbaum, and Sergio Rebelo (1995), "Capital Utilization and Returns to Scale," in B. Bernanke and J. Rothenberg, eds., NBER Macroeconomics Annual. Burnside, Craig, Martin Eichenbaum, and Sergio Rebelo (1996), "Sectoral Solow Residuals," European Economic Review, p 861-869. Caballero, Ricardo J. and Richard K.
Lyons (1992), "External Effects in U.S. Procyclical Productivity," Journal of Monetary Economics, vol 29, pp 209-226. Shapiro, Mathew (1996), "Macroeconomic Implications of Variations in the Workweek of Capital," BPEA vol2, p.79-119. Solow, Robert M. (1957), "Technological Change and the Aggregate Production Function," Review of Economics and Statistics , vol 39, p 312-320. 40 Dunne, Timothy, Lucia, Foster, Haltiwanger, John, and Troske, Kenneth. 2000. , op. cit. Bresnahan, Timothy F., Brynjolfsson, Erik, and Hitt, Lorin M. 1999, op. cit. Bartelsman, Eric (1990), “R&D Spending and Manufacturing Productivity: An Empirical Analysis,” FEDS Working Paper no.
122, Division of Research and Statistics, Federal Reserve Board of Governors, April. - 29-