Scarica The Role of IT in Economic Growth and Productivity: A New Economy Perspective e più Esercizi in PDF di Lingua Inglese solo su Docsity! Riccardo Runza Student n.0122000372 Elaborate of English language 1 THE NEW ECONOMY IT, ECONOMIC GROWTH AND PRODUCTIVITY The U.S. economy performed extraordinarily well in the 1990s. Unemployment has dropped to historically low rates; the federal government is awash with revenues, and after a quarter century of near stagnation, productivity growth is soaring. The unexpected economic strength has stimulated much discussion about the ‘new economy,’ and what the emergence of a new economy implies for the sustainability of the economic expansion in future years. The ‘new economy’ discussion has been inconclusive, in part because the term ‘new economy’ means different things to different people. Some definitions of the new economy embrace a very broad notion—that the fundamental economic concepts that guided economic policy in the past have become irrelevant in an age of global competition and rapid technological change. Others have a more narrow focus—the role of information processing and communications technology (IT) in accelerating the economy’s trend rate of output and productivity growth In this paper, we address primarily the narrower focus. New technologies are a fundamental part of the new economy notion, even if they represent only part of what some commentators mean by the term. OECD (2000) remarks that “something fundamental has changed” in the U.S. economy, and Nezu (2000), presumably voicing the views of his OECD collaborators, says that “most people agree that…information and communication technology, or IT, lies at its heart.” One major source of contention revolves around the question of whether the economic effects of the new technologies embodied in IT are captured by conventional, or‘old’, economic concepts and analysis. We contend that they are, and that the impact of IT is not so much “new” as it is largerthan before. Substantial post-1995 surges in labor productivity and in multifactor productivity, or MFP, are often pointed to as proof that computers are finally contributing to productivity. Equally often, this IT contribution is said to be new. For example, the Council of Economic Advisors has stated: “For many years it seemed that the information technology revolution was not paying off in higher productivity, but that now seems to be changing” (CEA, 2000, page 29). As mentioned earlier, a similar view has been expressed by the OECD. And the IMF study (International Monetary Fund, 2000) searched for an explanation for “why IT did not boost productivity before the 1990s in the United States and why more definitive signs are not seen elsewhere.” In evaluating such statements, it is essential to distinguish between IT’s contribution to economic growth and to labor productivity (or LP), on the one hand, and on the other IT’s contribution to multifactor productivity, or MFP. As shown below, IT contributes to economic growth and to LP through capital deepening—more capital per worker. But while IT contributes mightily to recent U.S. growth, this IT contribution to labor productivity is neither new, nor unexpected, nor is it unique to the U.S. IT capital has always contributed to U.S. (and other countries’) economic growth and LP growth, even in periods when labor productivity growth was low. The only real change is that IT capital is much larger than it once was and, not surprisingly, contributes more to recent growth than it did in earlier periods. It is also evident that there have been very rapid MFP gains in the production of semiconductors and computers that have translated into large reductions in the prices of IT capital. Those price declines are the primary factors behind the surge in IT investments in the 1990s. In turn, the surge in IT investments contributes to LP growth in IT-using industries and in the economy as a whole. The more fundamental question for new economy claims is whether the information revolution and the surge of investment in IT has stimulated increases in the productivity of the computer-using industries beyond the direct contribution to LP of more capital per worker— that is, has the greater use of IT contributed to the post-1995 surge in MFP? The surge in investment in IT after 1995 coincided with an unanticipated increase in U.S. MFP growth.
