computers and productivity

[...]... larger than both x and y and a largest element that is smaller than both (Milgrom and Roberts, 1995) For two sets S, U ∈ RN , define the partial ordering S ≥ U as being equivalent to the condition that ∀ x ∈ S and ∀y ∈ U : max{x, y} ∈ S and min{x, y} ∈ U } Then it follows that the Euclidean space RN and ordering ≥ form a lattice 2.3 ICT productivity and complementarities 27 Milgrom and Roberts (1990;... ICT supply and demand are mutually reinforcing Advances in ICT facilitate new economic activities which in turn demand more powerful computers to support their innovations (Milgrom et al., 1991) For example, ICT and the Internet have facilitated e-commerce, while the demand for digitalised products such as software, music and films was an important driver to foster the further development and diffusion... but in the productivity statistics” (Uchitelle, 2000) 11 12 Schreyer (2002) and Vijselaar and Albers (2002) find that the overall contributions of ICT to productivity growth do not vary greatly with different price indices for ICT See, e.g., Osterman (1986), Loveman (1994), Roach (1991) and Morrison and Berndt (1991) For surveys of early literature on the productivity effects of ICT, see Berndt and Malone... service, timeliness and convenience (Brynjolfsson and Hitt, 1995; Licht and Moch, 1999) Finally, and maybe most importantly, ICT applications have great impacts also on processes and organisation inside firms and administrations (Bresnahan and Greenstein, 1996) Firms employ more flexible and more easily programmable manufacturing tools that incorporate ICT (Milgrom and Roberts, 1990); supply chain management... assessing the productivity gains from ICT Chapter 3 scrutinises various methodological issues in productivity measurement and derives a preferred 6 1 Introduction econometric approach that captures the average impacts of ICT on firm productivity Extending this approach, chapters 4 and 5 then investigate to what degree the productivity contributions of ICT are contingent on firms’ innovative activities and on... accumulation and spillovers They are mainly inspired by seminal contributions by Romer (1990b) and Lucas (1988) who point to increasing returns and spillovers in the course of aggregate knowledge accumulation 2.3 ICT productivity and complementarities 15 Two important inventions in the past, the steam engine and the electrification of industries after World War I, had led to substantial overall productivity. .. see Triplett (1990); for more recent applications, see Berndt and Rappaport (2001) In Germany, the Federal Statistical Office introduced hedonic techniques for calculating price indices for PCs in 2002 (Linz and Eckert, 2002; Moch et al., 2002) 2.3 ICT productivity and complementarities 21 productivity contributions of the ICT sector and the productivity gains from capital deepening are understated while... of ICT as a general purpose technology tubes when using their computers And third, the scope of use for computers has become so large that computers do not only solve differential equations and make bills for department stores but in fact today comprise a scope of highly elaborated purposes During the last decades, computers, the Internet and other applications of ICT have turned from helpful computational... focussed on the United States, probably for two main reasons First, the U.S economy has been at the frontier of productivity and living standards for several decades and is strongly engaged both in the production and adoption of ICT And second, the availability of relevant data (at firm, industry and aggregate level) is particularly well developed in the U.S., facilitating a variety of analyses that 1 Introduction... fed into a New Economy (e.g., Jorgenson and Stiroh, 2000; Oliner and Sichel, 2000) The most prominent critic of this enthusiastic view was Robert Gordon who carried out own decompositions of productivity growth in the U.S and who found that nearly all of the productivity revival in the U.S in the second half of the 1990s occurred in the ICT-producing sector and some very limited parts of the durable . of productivity and living standards for several decades and is strongly engaged both in the production and adoption of ICT. And sec- ond, the availability of relevant data (at firm, industry and. both more productive and more disposed to ICT applications. Similarly, firms tend to invest (in both ICT and other assets) during boom periods when demand, factor utilisation and productivity are. technology tubes when using their computers. And third, the scope of use for computers has become so large that computers do not only solve differential equations and make bills for department stores