Transcript IT in Europe and the US

InnovaTion, InvesTment and ImiTation:
How Information and Communication Technology
Affected European Productivity Performance
Bart Los and Marcel Timmer, University of Groningen
(Faculty of Economics, Groningen Growth and Development Centre)
This project is funded by the European Commission, Research Directorate General as
part of the 6th Framework Programme, Priority 8, "Policy Support and Anticipating
Scientific and Technological Needs".
1
End of European catch-up process
Labour productivity (EU as % of U.S.)
120%
100%
80%
60%
40%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2
Slowdown in most countries
GDP per hour growth, 1980-1995 and 1995-2004
4.0
% per year
3.0
2.0
1.0
0.0
ES
IT
NL
PT
DE
DK
BE
1980-1995
FR
UK
AT
US
SE GR
FI
1995-2004
3
ICT as a GPT
•
ICT as GPT (see David, AER 1990; Brynjolfsson & Hitt, JEPersp 2000; Hall &
Trajtenberg 2004 NBER)
•
Europe has exhausted imitation in old technologies, and is lagging in
application of new ICT-based innovations (Aghion and Howitt 2006, JEEA).
•
Divergence is possible. Degree to which imitation can lead to
productivity gains depends on technology operated (“appropriate
technology”, Basu & Weil, QJE, 1998)
•
Traditional growth accounting findings: Total Factor Productivity
growth in market services in US, but not in Europe (see Jorgenson, Ho
and Stiroh 2005; Triplett and Bosworth 2004; Inklaar, O’Mahony and Timmer, RIW,
2003; Timmer & Van Ark, OxEP 2005.)
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This paper
•
•
TFP should be divided into pure technological change (“innovation”)
and efficiency changes (“imitation”) through estimation of global
production frontier. (see Los & Timmer, JDevE 2005, Timmer and Los, JPA 2005)
ICT capital is a critical input
Questions
• How many years are European countries lagging behind in ICT?
• How efficient are European countries in using “old-vintage” ICT?
• Does this differ for various sectors?
• How much of European growth is due to innovation and how much
due to imitation?
5
Falling behind, catching up or
leapfrogging?
US’04
GDP/
hour
GE’04?
US’00
GE’00
ICT/hour
6
Frontier Estimation
• Data Envelopment Analysis on 1 output (GDP) and 3 inputs (labour,
IT and non-IT), assuming CRS (Färe et all, 1994, AER)
• Non-parametric approach with very few restrictions on production
technology
• Advantage is flexible functional form, which allows for localized
technological change
• DEA with intertemporal dataset, to avoid technological regress.
– Frontier for year y based on all observations from 1980 up to y
– First frontier for 1990.
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Frontier estimation (1)
country 2000
GDP/
hour
Input/hour
8
Frontier estimation (2)
frontier 2000
GDP/
hour
Input/hour
9
Frontier estimation (3)
country 2004
GDP/
hour
Input/hour
10
Frontier estimation (4)
frontier 2004
GDP/
hour
Input/hour
11
Data
-
Fourteen countries: EU-15 (minus Luxembourg and Ireland), and U.S.
-
GDP (at PPP), total hours worked and capital stocks for 1980-2004
-
Harmonised Capital stock estimates for six assets, using Perpetual
Inventory Method, aggregated into two groups: Non-IT and IT capital
Non-IT: machinery, transport equipment and non-residential buildings;
IT: office and computing equipment, communication equipment and
software.
-
All data from The Conference Board and Groningen Growth and
Development Centre, Total Economy Database, May 2006,
(www.ggdc.net) (Updated from Timmer & Van Ark, OxEP, 2005)
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Lagging ICT stocks in Europe
ICT stock per hour worked, 1995
3000
(US$ per hour)
2500
2000
1500
1000
500
0
PT
GR
ES
NL
FR
UK
IT
FI
BE
AT
DK
DE
SE
US
13
Frontier Results 1990
GDP per hour worked ($)
37
35
33
1990
31
29
27
0
1
2
3
4
5
6
7
ICT stock per hour worked ($)
Frontier points include UK (80,97,88), US (89, 90), DK (80, 85, 86),
France (80, 90)
14
Frontier Results 1995
GDP per hour worked ($)
37
35
33
1990
1995
31
29
27
0
1
2
3
4
5
6
7
ICT stock per hour worked ($)
New Frontier points include UK (95), US (94, 95), DK (95)
15
Frontier Results 2000
GDP per hour worked ($)
37
35
33
1990
1995
2000
31
29
27
0
1
2
3
4
5
6
7
ICT stock per hour worked ($)
New Frontier points include US (98,99,00), UK (97, 00), DK (96,00)
16
Frontier Results 2004
GDP per hour worked ($)
37
35
1990
1995
2000
2004
33
31
29
27
0
1
2
3
4
5
6
7
ICT stock per hour worked ($)
New Frontier points include Fr (04), US (04), DK (02,04)
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European countries in 2004:
GDP per hour worked ($)
38
UK
FR
33
US
DK
BE,SW
NL
28
DE
AT
FI
IT
Pr
23
Es
Gr
18
0
1
2
3
4
5
6
7
ICT stock per hour worked ($)
frontier
country 2004
18
ICT Lags ..….
GDP per hour worked ($)
38
UK
FR
33
US
DK
BE,SW
NL
28
DE
AT
FI
IT
Pr
23
Es
Gr
18
0
1
2
3
4
5
6
7
ICT stock per hour worked ($)
country 2004
US 1980-2003
19
But some have succesfully imitated,
or even innovated
GDP per hour worked ($)
38
UK
FR
33
US
DK
BE,SW
NL
28
DE
AT
FI
IT
Pr
23
Es
Gr
18
0
1
2
3
4
5
6
7
ICT stock per hour worked ($)
frontier 2004
country 2004
20
Efficiency scores
Denmark
France
UK
USA
Belgium
Sweden
Germany
Netherlands
Austria
Finland
Italy
Portugal
Spain
Greece
1990
1.00
1.00
0.97
1.00
0.92
0.87
0.87
1.00
0.89
0.76
0.94
0.99
0.77
0.65
1995
1.00
0.99
1.00
1.00
0.92
0.86
0.90
1.00
0.88
0.75
0.94
0.92
0.74
0.62
2000
1.00
1.00
1.00
1.00
0.94
0.89
0.93
0.94
0.92
0.84
0.91
0.91
0.72
0.65
2004
1.00
1.00
1.00
1.00
0.92
0.92
0.92
0.91
0.90
0.86
0.84
0.83
0.68
0.65
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European manufacturing is innovating
GDP per hour worked ($)
45
FI
FR
US
NL
40
DE
35
DK
AT
UK
IT
30
25
0.04
0.14
0.24
0.34
0.44
0.54
ICT stock per hour worked ($)
frontier 2000
country 2000
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Main findings and road ahead
• Global production frontier is driven by investment in ICT
capital goods
• European countries lag US in application of ICT
technology (4 to 16 years)
• Some countries are succesful imitators (FR, UK, DK), but
others face divergence (IT, PT, ES)
• Different pattern at industry level: innovation in
manufacturing in some countries
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Main findings and road ahead
• Industry-level analysis, in particular services: EUKLEMS
data project
• Explanation of divergence in terms of “Imitation”
(inefficiency model) including regulation and skilled labour
supply as determinants
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