AdminAdmin
February 8th, 2010, 09:50 AM
Technology—especially information technology (IT)—has demonstrated phenomenal growth over the last few decades, while the growth of business-sector productivity in the United States has been relatively modest, seeming to belie the much-ballyhooed information technology revolution. If computer usage has exploded so dramatically, and if computers contribute to increased efficiency, some people are asking, where is the associated productivity growth? There are actually two parts to the question. First, are IT investments improving productivity? Second, if they are, why don’t the aggregate numbers reflect this? The essence of this puzzle is captured by Robert Solow’s quip that computers are everywhere “except in the productivity statistics.”
Solow’s observation produced a spate of research to explain this apparent puzzle. Three explanations coming out of this research will be discussed in this article: measurement difficulties, the small proportion of capital stock that computers represent, and the concept that diffusion of changing work methods is still under way.
The following section shows some of the trends in investment in IT and the corresponding trends in output per hour for total business and manufacturing. It then looks at some selected industries to see if the IT/productivity growth nexus exists at this level of aggregation. The next section analyzes the three explanations offered for the apparent puzzle. The fourth section offers some tentative predictions for when the latent productivity will begin to have an impact on the statistics. Finally, I offer some conclusions about the relation between information technology and productivity growth.
Solow’s observation produced a spate of research to explain this apparent puzzle. Three explanations coming out of this research will be discussed in this article: measurement difficulties, the small proportion of capital stock that computers represent, and the concept that diffusion of changing work methods is still under way.
The following section shows some of the trends in investment in IT and the corresponding trends in output per hour for total business and manufacturing. It then looks at some selected industries to see if the IT/productivity growth nexus exists at this level of aggregation. The next section analyzes the three explanations offered for the apparent puzzle. The fourth section offers some tentative predictions for when the latent productivity will begin to have an impact on the statistics. Finally, I offer some conclusions about the relation between information technology and productivity growth.