APPROACH

A national and international comparative point of view - a view from 30 000 feet - does not address the precise nature of the impacts of digital technology on individual firm and consumer behavior.

Will ICTs boost US productivity growth again as they did with the emergence of the

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Source: The Conference Board Total Economy Database™ (The Conference Board, 2015).

Figure 6.1 H-P (Hodrick-Prescott) filter trend growth in labor productivity (GDP per person employed), 1970-2013

Internet in the 1990s? Can Europe’s Horizon 2020 strategy to realize the potential of ICT spur its long-term growth? To answer these questions one needs to appropriately frame the mechanisms through which the Internet, and technologies spawned by the Internet, impact economies. In the mainstream productivity and sources-of-growth (SOG) literature, assessments center on the impact of ICT capital investments on labor productivity and the rate of increase in total factor productivity (TFP): are these the appropriate metrics? Where in the data does one ‘go’ to see the impact of the Internet? What about the unmeasured consumer surplus or, for that matter, why not consider jobs?

We rely primarily on the SOG framework for the analysis reported in this chapter. The advantages of the growth accounting framework are well known, chief of which is its general equilibrium perspective. New technologies inevitably displace some existing eco­nomic activity, and the SOG framework naturally accounts for these effects (unlike many microeconomic analyses or case studies of specific innovations). Against this advantage, the data requirements are steep (Griliches, 1994), suggesting that Solow’s famous 1987 quip could be paraphrased for today’s times as, ‘You see the InternetZSmartphoneZCloud Computing age everywhere but in the productivity statistics’. Let us begin, then, by reviewing and analyzing these statistics.

6.3