Post on 12-Jan-2016
description
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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".
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End of European catch-up processLabour productivity (EU as % of U.S.)
40%
60%
80%
100%
120%
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
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Slowdown in most countries
GDP per hour growth, 1980-1995 and 1995-2004
0.0
1.0
2.0
3.0
4.0
ES IT NL PT DE DK BE FR UK AT US SE GR FI
% p
er y
ear
1980-1995 1995-2004
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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?
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Falling behind, catching up or leapfrogging?
ICT/hour
GDP/hour
GE’00
US’00
US’04
GE’04?
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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)
Input/hour
country 2000GDP/hour
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Frontier estimation (2)
Input/hour
frontier 2000
GDP/hour
10
Frontier estimation (3)
Input/hour
country 2004
GDP/hour
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Frontier estimation (4)
Input/hour
frontier 2004
GDP/hour
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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 capitalNon-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
0
500
1000
1500
2000
2500
3000
PT GR ES NL FR UK IT FI BE AT DK DE SE US
(US
$ p
er h
ou
r)
14
Frontier Results 1990
27
29
31
33
35
37
0 1 2 3 4 5 6 7
ICT stock per hour worked ($)
GD
P p
er h
ou
r w
ork
ed (
$)
1990
Frontier points include UK (80,97,88), US (89, 90), DK (80, 85, 86), France (80, 90)
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Frontier Results 1995
New Frontier points include UK (95), US (94, 95), DK (95)
27
29
31
33
35
37
0 1 2 3 4 5 6 7
ICT stock per hour worked ($)
GD
P p
er h
ou
r w
ork
ed (
$)
19901995
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Frontier Results 2000
New Frontier points include US (98,99,00), UK (97, 00), DK (96,00)
27
29
31
33
35
37
0 1 2 3 4 5 6 7
ICT stock per hour worked ($)
GD
P p
er h
ou
r w
ork
ed (
$)
199019952000
17
Frontier Results 2004
New Frontier points include Fr (04), US (04), DK (02,04)
27
29
31
33
35
37
0 1 2 3 4 5 6 7
ICT stock per hour worked ($)
GD
P p
er h
ou
r w
ork
ed (
$)
1990199520002004
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European countries in 2004:
18
23
28
33
38
0 1 2 3 4 5 6 7
ICT stock per hour worked ($)
GD
P p
er h
ou
r w
ork
ed (
$)
frontier country 2004
US
BE,SW
FI
FRUK
DK
Gr
Pr
Es
NL
IT
DE AT
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ICT Lags ..….
18
23
28
33
38
0 1 2 3 4 5 6 7
ICT stock per hour worked ($)
GD
P p
er h
ou
r w
ork
ed (
$)
country 2004 US 1980-2003
US
BE,SW
FI
FRUK
DK
Gr
Pr
Es
NL
IT
DE AT
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But some have succesfully imitated, or even innovated
18
23
28
33
38
0 1 2 3 4 5 6 7
ICT stock per hour worked ($)
GD
P p
er h
ou
r w
ork
ed (
$)
frontier 2004 country 2004
US
BE,SW
FI
FRUK
DK
Gr
Pr
Es
NL
IT
DE AT
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Efficiency scores
1990 1995 2000 2004Denmark 1.00 1.00 1.00 1.00 France 1.00 0.99 1.00 1.00 UK 0.97 1.00 1.00 1.00 USA 1.00 1.00 1.00 1.00 Belgium 0.92 0.92 0.94 0.92 Sweden 0.87 0.86 0.89 0.92 Germany 0.87 0.90 0.93 0.92 Netherlands 1.00 1.00 0.94 0.91 Austria 0.89 0.88 0.92 0.90 Finland 0.76 0.75 0.84 0.86 Italy 0.94 0.94 0.91 0.84 Portugal 0.99 0.92 0.91 0.83 Spain 0.77 0.74 0.72 0.68 Greece 0.65 0.62 0.65 0.65
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European manufacturing is innovating
25
30
35
40
45
0.04 0.14 0.24 0.34 0.44 0.54
ICT stock per hour worked ($)
GD
P p
er
ho
ur
wo
rked
($
)
frontier 2000 country 2000
FI FR
UK
NL
IT
DE
AT
US
DK
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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