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Productivity, innovation and ICT in Old and New Europe

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  • Bart van Ark
  • Marcin Piatkowski

Abstract

This paper investigates the productivity performance of CEE countries vis-Ã -vis the EU-15 during the 1990s to detect sources of convergence between the two regions. The paper shows that changes in labour intensity have been an important source of productivity convergence during the 1990s, and are likely to remain so in the near future. It is also found that despite lower income levels, ICT capital in the CEE-10 has contributed as much to labour productivity growth as in the EU-15. Industry analysis shows that manufacturing industries that have invested heavily in ICT have been key to the restructuring process. As such ICT may therefore have been an important source of growth but probably temporary source of convergence. In the longer run the impact of ICT on growth will have to come primarily from its productive use in services. The paper therefore includes a New Economy Indicator that reflects the existence of conducive environment for continued ICT investment and diffusion. It shows that further reforms are much needed for CEE countries to enter a second convergence phase in the coming decades. Copyright Springer-Verlag Berlin Heidelberg 2004

Suggested Citation

  • Bart van Ark & Marcin Piatkowski, 2004. "Productivity, innovation and ICT in Old and New Europe," International Economics and Economic Policy, Springer, vol. 1(2), pages 215-246, January.
    • Handle: RePEc:kap:iecepo:v:1:y:2004:i:2:p:215-246
    DOI: 10.1007/s10368-004-0012-y
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    References listed on IDEAS

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    1. Francesco Daveri, 2002. "The New Economy in Europe, 1992--2001," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 345-362.
    2. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(2), pages 385-406, June.
    3. Marcin Piatkowski, 2002. "The 'New Economy' and Economic Growth in Transition Economies: The Relevance of Institutional Infrastructure," WIDER Working Paper Series DP2002-62, World Institute for Development Economic Research (UNU-WIDER).
    4. Marcin Piatkowski, 2003. "The Contribution of ICT Investment to Economic Growth and Labor Productivity in Poland 1995-2000," Development and Comp Systems 0308002, University Library of Munich, Germany.
    5. van Ark, Bart & Inklaar, Robert & McGuckin, Robert H. & Timmer, Marcel P., 2003. "The Employment Effects of the ‘New Economy’. A Comparison of the European Union and the United States," National Institute Economic Review, National Institute of Economic and Social Research, vol. 184, pages 86-98, April.
    6. Kolodko, Grzegorz W., 2000. "From Shock to Therapy: The Political Economy of Postsocialist Transformation," OUP Catalogue, Oxford University Press, number 9780198297437.
    7. Alessandra Colecchia & Paul Schreyer, 2001. "ICT Investment and Economic Growth in the 1990s: Is the United States a Unique Case? A Comparative Study of Nine OECD Countries," OECD Science, Technology and Industry Working Papers 2001/7, OECD Publishing.
    8. Marcin Piatkowski, 2004. "Does ICT Investment Matter for Growth and Labor Productivity in Transition Economies?," Development and Comp Systems 0402008, University Library of Munich, Germany.
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    More about this item

    Keywords

    O31; O47; O52; P27;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects

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