Consequences of the new information and communication technologies for growth, productivity and employment

Abstract

Purpose

The purpose of this paper is to discuss the high rates of economic growth of the US economy and the remarkable acceleration of productivity growth since the mid‐1990s which is widely attributed to the modern information and communication technologies (ICTs).

Design/methodology/approach

After identifying three key factors for Solow's productivity puzzle and examining ICTs as a general purpose technology, three main channels of ICTs' impact in the economy are discussed: the first transmission channel is direct and consists of the effects generated by rapid technical progress within the ICT‐capital goods producing sector. The second one is due to the increasing accumulation and application of ICT goods and services in the user sectors. ICTs' positive spillover effects comprise the third transmission channel, i.e. they lead to “disembodied” increases in efficiency in the sense of “learning by doing” in the end‐user sector.

Findings

The diffusion of ICTs requires investment in all industries, i.e. the improvement of competitiveness on the macro level is strongly linked to investment activities and skill qualifications on the micro level.

Research limitations/implications

The paper concludes with some comparisons between the US and the German economy where the acute need for infrastructure investment in East Germany in the 1990s limited the possibilities for investment in ICTs exactly at a time of high‐technological dynamism at the start of an upswing of a new Kondratieff cycle. Although some comparisons with the EU are made the impact of ICTs in other countries except the USA and Germany is not discussed more intensively.

Practical implications

A very useful source of information for graduate students and policy makers alike on the theoretical and empirical impact of new technologies on economic development.

Originality/value

This paper fulfils an information need for comparing growth in international perspective.

Citation

Hagemann, H. (2008), "Consequences of the new information and communication technologies for growth, productivity and employment", Competitiveness Review, Vol. 18 No. 1/2, pp. 57-69. https://doi.org/10.1108/10595420810874600