UNIVERSITÄT POTSDAM - Prof. Dr. Paul JJ Welfens

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(ICT-using sector) and negative labor productivity growth in the third sector. Simple aggregate growth accounting might find that the economy under consideration has not experienced any productivity acceleration in the context of ICT growth. An aggregate view without accompanying disaggregated analysis is totally inadequate to the analytical challenge of the ICT problem. In a three-sector perspective one has to take into account three sectors where both the ICT-producing sector and the ICT-using sector can have spillover effects – both within the broadly defined ICT sector (A+B) and with respect to the overall ICT sector vis-à-vis the non-ICT sector. Some of the ICT-internal spillover effects could be magnified via network effects (see Figure 2). While technological dynamics will influence the ICT sector economic policy and the NGOs – including employer organizations and trade unions – also can have an impact on the productivity growth in each sector and the overall economy, respectively. Fig. 2: ICT and Productivity Growth 12 Spillovers 1 2 3 A ICT Producing B ICT Using C Productivity Effects Network Effects Spillover AB Spillover BA Network Effects Non-ICT Sector 4 Economic System Economic Policy/ Regulations NGOs; Trade Unions etc. The usefulness of disaggregate analysis is fully discussed in the STIROH (2001) paper in which it is shown that virtually all of the aggregate productivity acceleration in the US during the 1990s can be traced to the industries either producing ICT or using ICT intensively – with no or negative contribution from the remaining industries that are
less involved in the IT revolution. It is worth noting that the gross output growth rate for agriculture, forestry and fishing in the US fell from 0.58% p.a. in the period 1987- 95 to -0.67% in 1995-99 and in construction remained negative (at around –0.8%) in both periods whereas durable goods manufacturing had a growth rate which increased from 3.97% to 6.47% and retail trade increased from 0.97% to 3.03% p.a. Another important contribution to growth accounting is by VAN ARK (2001) who makes a distinction between ICT-producing manufacturing and service industries, intensive ICT-using manufacturing and service industries and the non-ICT sector (the rest of the economy). VAN ARK presents measures of the contribution of each sector to growth and acceleration of growth in output, employment and labor productivity for ten OECD countries during the 1990s: Productivity growth differentials between the US and most EU countries are partly explained by a larger and more productive ICTproducing sector in the US, but also by bigger productivity contributions from ICTusing industries and services in the US. The annual percentage point contribution of the ICT-using sector in the US increased from 0.3 in the period 1990-95 to 1.37 in 1995-99 while the overall increase in labor productivity was 1.15% in the first period and 2.54 in the second period; the ICT-producing sector contributed 0.31 points in the first period and 0.65 points in the second period. By contrast, labor productivity growth in Japan was only about 0.8 percent p.a. in both periods, and the role of the ICT-using sector contributed only about 0.35 points with a slight decline over time. In Germany, the annual labor productivity growth fell from 2.10 percent in the first period to 1.66 percent in the second period. The ICT-producing sector accounted for 0.1 points in the first period and for 0.4 points in the second period; a similar result is found for the Netherlands. However, while the contribution to labor productivity growth in Germany’s ICT-using sector fell from 0.53 percentage points in the first period of 0.52 points in the second period, the contribution of the Dutch ICT-using sector increased from 0.32 percentage points to 0.61 points in the 1990s. In Denmark, Finland and the Netherlands (and the US) the contribution of the ICT-using sector slightly exceeded that of Germany’s respective sector in the second half of the 1990s; it is also worthy mentioning that France and Italy had a rather low contribution of the ICT-using sector in both subperiods of the 1990s. Finally, it was remarkable that the non-ICT sector in the US accounted for a stable contribution to overall labor productivity growth while it fell in Canada, Denmark, Finland, France, Germany, Italy and the Netherlands in the 1990s. Against such a background the analysis of the ECB (2001) – not taking into account relevant theoretical and empirical analysis – is partly doubtful. The ECB is suggesting that there is no New Economy effect in the euro area in the 1990s, but the ECB does not look into any disaggregated analysis nor does it try to decompose cyclical and trend effects. Furthermore, it limits the analysis (due to data problems) to Germany, France, Italy and Finland; in the case of aggregate growth accounting the Netherlands 13
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Page 62 and 63: JONES, C.I. and WILLIAMS, J.C. (199
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Tab A6: Sectoral Developments in th
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UNIVERSITÄT POTSDAM - Prof. Dr. Paul JJ Welfens

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