UNIVERSITÄT POTSDAM - Prof. Dr. Paul JJ Welfens

Tab 6: The Growth Contributions of IT and Non-IT Capital, Labor and Total
Factor Productivity, 1991-99
(1) (2) (3) (4) (5)
GDP IT CAPITAL NON-IT
CAPITAL
Labor TFP
USA 3.34 0.94 0.42 0.90 1.08
Ireland 6.91 0.64 0.63 1.93 3.72
Denmark 2.87 0.52 0.60 0.34 1.40
Netherlands 2.83 0.68 0.31 1.09 0.75
UK 2.68 0.76 0.37 0.51 1.04
Portugal 2.47 0.43 1.05 -0.35 1.34
Austria 2.33 0.45 1.29 -0.46 1.04
Spain 2.32 0.36 1.10 0.36 0.51
Greece 2.25 0.34 0.65 0.46 0.78
Finland 2.13 0.45 -0.13 -1.05 2.86
Belgium 1.88 0.48 0.68 0.00 0.72
Sweden 1.86 0.59 0.32 -0.28 1.23
Germany* 1.65 0.49 0.56 -0.23 0.83
France 1.64 0.41 0.49 -0.19 0.92
Italy 1.41 0.31 0.82 -0.30 0.58
Notes: Data in percentage points. Column (1) presents GDP (business sector, measured at factor costs)
growth rates from 1991-99. Column (2)-(5) present the contributions of employment (hours worked), IT
and non-IT capital and total factor productivity to GDP growth.
* Germany = 1992-1999
Source: DAVERI, F. (2001): Information Technology and Growth in Europe, p. 7.
While the US recorded an acceleration in growth contribution from IT capital, namely
from 0.53 in 1991-95 to 1.45 in 1996-99, Germany had a rather flat contribution from
IT capital, namely 0.5. Insufficient structural change, the monopoly of telecommunications
until 1998, and lack of cheap internet rates (including the refusal of Deutsche
Telekom AG (except for the second half of 2000) to offer a flat rate for standard telecommunications
users could be main elements in explaining the modest IT contribution
in Germany (WELFENS, 2001b, 2001c; WELFENS / JUNGMITTAG, 2001). Comparing
the US and the EU it is quite obvious that computer density in the Community is
much lower than in the US. Germany reached three-fourths of the US computer density;
France was slightly weaker, and Italy, with about one-half of US computer density,
was just at the level of Korea in 1999. In the EU only the Scandinavian countries
had a computer density comparable to the US. It is noteworthy that Sweden’s tax policy
contributed actively to raising computer density by giving firms tax incentives to
sell used PCs at discount prices to employees.
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