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The Economic Impact of Cloud Computing on Business Creation, Employment and Output in Europe. An application of the Endogenous Market Structures Approach to a GPT innovation

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  • Federico Etro

Abstract

Cloud computing is a new general purpose Internet-based technology through which information is stored in servers and provided as a service and on-demand to clients. Adopting the endogenous market structures approach to macroeconomics, we analyze the economic impact of the gradual introduction of cloud computing and we emphasize its role in fostering business creation and competition thanks to the reduction of the fixed costs of entry in ICT capital. Our calculations based on a DSGE model show a significative impact for the European Union with the creation of a few hundred thousands new SMEs and a significant contribution to growth. Governments could enhance these benefits by subsidizing the adoption of cloud computing solutions.

Suggested Citation

  • Federico Etro, 2009. "The Economic Impact of Cloud Computing on Business Creation, Employment and Output in Europe. An application of the Endogenous Market Structures Approach to a GPT innovation," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(2), pages 179-208.
    • Handle: RePEc:ete:revbec:20090204
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    Cited by:

    1. Briglauer Wolfgang & Frübing Stefan & Vogelsang Ingo, 2014. "The Impact of Alternative Public Policies on the Deployment of New Communications Infrastructure – A Survey," Review of Network Economics, De Gruyter, vol. 13(3), pages 227-270, September.
    2. Briglauer, Wolfgang, 2014. "The impact of regulation and competition on the migration from old to new communications infrastructure: Recent evidence from EU27 member states," ZEW Discussion Papers 14-085, ZEW - Leibniz Centre for European Economic Research.
    3. Colciago, Andrea & Etro, Federico, 2010. "Real business cycles with Cournot competition and endogenous entry," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1101-1117, December.
    4. Jacques W. Brook & Vincent Feltkamp & Martin van der Meer, 2012. "Cloud Enabled Business Model Innovation: Gaining Strategic Competitive Advantage as the Market Emerges," Working Papers 2012/49, Maastricht School of Management.
    5. Gilbert Cette & Sandra Nevoux & Loriane Py, 2022. "The impact of ICTs and digitalization on productivity and labor share: evidence from French firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 31(8), pages 669-692, November.
    6. Ozu, Atsushi & Kasuga, Norihiro & Morikawa, Hiroyuki, 2020. "Cloud computing and its impact on the Japanese macroeconomy–its oligopolistic market characteristics and social welfare," Telecommunications Policy, Elsevier, vol. 44(1).
    7. Robert J. Kauffman & Dan Ma & Martin Yu, 2018. "A metrics suite of cloud computing adoption readiness," Electronic Markets, Springer;IIM University of St. Gallen, vol. 28(1), pages 11-37, February.
    8. Severin Oesterle & Jan Jöhnk & Robert Keller & Nils Urbach & Xin Yu, 2020. "A contingency lens on cloud provider management processes," Business Research, Springer;German Academic Association for Business Research, vol. 13(3), pages 1451-1489, November.
    9. Vahagn Jerbashian & Anna Kochanova, 2017. "The Impact of Telecommunication Technologies on Competition in Services and Goods Markets: Empirical Evidence," Scandinavian Journal of Economics, Wiley Blackwell, vol. 119(3), pages 628-655, July.
    10. Florencia Jaccoud & Fabien Petit & Tommaso Ciarli & Maria Savona, 2024. "Automation and Employment over the Technology Life Cycle: Evidence from European Regions," CEPEO Working Paper Series 24-02, UCL Centre for Education Policy and Equalising Opportunities, revised Feb 2024.
    11. Farid Shirazi & Nick Hajli, 2021. "IT-Enabled Sustainable Innovation and the Global Digital Divides," Sustainability, MDPI, vol. 13(17), pages 1-24, August.
    12. Goldfarb, Avi & Taska, Bledi & Teodoridis, Florenta, 2023. "Could machine learning be a general purpose technology? A comparison of emerging technologies using data from online job postings," Research Policy, Elsevier, vol. 52(1).
    13. Harris, Irina & Wang, Yingli & Wang, Haiyang, 2015. "ICT in multimodal transport and technological trends: Unleashing potential for the future," International Journal of Production Economics, Elsevier, vol. 159(C), pages 88-103.
    14. Eleni Laitsou & Antonios Kargas & Dimitrios Varoutas, 2020. "How ICT affects economic growth in the Euro area during the economic crisis," Netnomics, Springer, vol. 21(1), pages 59-81, December.
    15. Hsu, Pei-Fang & Ray, Soumya & Li-Hsieh, Yu-Yu, 2014. "Examining cloud computing adoption intention, pricing mechanism, and deployment model," International Journal of Information Management, Elsevier, vol. 34(4), pages 474-488.

    More about this item

    Keywords

    Endogenous market structure; Cloud computing; Utility computing; General purpose technology; Firms’ Entry; Business Cycle;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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