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Measuring information as an expanding resource: Information production and its TFP-information absorption ecosystem “multiplier”

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  • Merva, Mary
  • Costagli, Simona

Abstract

Indices to measure the extent and penetration of information in an economy are static measures. Information, however, is a dynamic, expanding resource. Information is produced when data from digital computers articulate with human-generated systems where they are transformed into information. Economic information is effective when it fuels technological innovations contributing to total factor productivity (TFP) growth. This paper develops a theoretical model to measure effective economic information (EEI) as a dynamic process. Using systemic design thinking, design systems in data value chains are embedded within their TFP-information absorption ecosystem. The system's characteristics of human capital, economic, institutional, and regulatory factors determine the quality and amount of EEI produced. The EEI measurement model uses differential equations allowing for the dynamic expansion of information to include information-knowledge spillovers. Empirical tests for EEI on TFP for EU countries show that EEI is the key driver for TFP growth, while IT investment alone is only a necessary condition. EEI-type measures direct policy attention towards improving TFP-information absorption ecosystems and supporting the adaption of design processes that are more suitable for their TFP-information absorption ecosystems. Both are necessary to connect IT investment to TFP growth.

Suggested Citation

  • Merva, Mary & Costagli, Simona, 2024. "Measuring information as an expanding resource: Information production and its TFP-information absorption ecosystem “multiplier”," Telecommunications Policy, Elsevier, vol. 48(7).
    • Handle: RePEc:eee:telpol:v:48:y:2024:i:7:s0308596124001046
    DOI: 10.1016/j.telpol.2024.102807
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    More about this item

    Keywords

    Measuring economic information; Total factor productivity growth; Systemic design thinking; IT investment; Information absorption ecosystems; Information-technology spillovers;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other

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