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Productivity breakdown of the information and computing technology industries across countries

Author

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  • B B M Shao

    (Arizona State University—Main Campus)

  • W S Shu

    (San Diego State University)

Abstract

In this paper, we measure productivity growth of the information and computing technology (ICT) industries in 14 Organization for Economic Cooperation and Development countries over the 13-year period of 1978–1990. The ICT industries are the providers of essential information technology (IT) capital goods. This macro-level analysis seeks to find out how productively such IT capital goods are provided. The basic unit of analysis employed is the Malmquist Total Factor Productivity (TFP) index. The Malmquist TFP index is then decomposed into three constituent elements accounting for different sources of productivity growth: technological progress, efficiency change, and change in economies of scale. The approach of measurement is based on the concept of distance functions and employs the non-parametric frontier method of data envelopment analysis. Our results indicate that each country's ICT industry manifests its own particular patterns in various performance measures. Among the 14 countries examined, 10 had witnessed productivity growth in their ICT industries. Overall, these ICT industries are found more productive than other industries when compared with previous research. Further analyses reveal that (1) most of the productivity growth measured is due to technological progress; (2) efficiency change exerts a relatively small positive effect on productivity growth; and (3) the change in scale economies unfavourably affects productivity for most countries. Finally, practical implications for formulating IT policy are drawn from our results, and topics are identified for future research.

Suggested Citation

  • B B M Shao & W S Shu, 2004. "Productivity breakdown of the information and computing technology industries across countries," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(1), pages 23-33, January.
    • Handle: RePEc:pal:jorsoc:v:55:y:2004:i:1:d:10.1057_palgrave.jors.2601656
    DOI: 10.1057/palgrave.jors.2601656
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    Cited by:

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    2. S J Ho & S K Mallick, 2010. "The impact of information technology on the banking industry," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(2), pages 211-221, February.
    3. D K Despotis, 2005. "A reassessment of the human development index via data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(8), pages 969-980, August.
    4. Arzdar Kiracı, 2015. "The Impact of Innovative New Economy Products on Market Competition: Competition Might Decrease," EY International Congress on Economics II (EYC2015), November 5-6, 2015, Ankara, Turkey 304, Ekonomik Yaklasim Association.
    5. Kenan Oğuzhan Oruç & Fatma Gül Altın, 2015. "The Effect of the 2007 Financial Crisis on the Information Technologies Sector: Application of Malmquist Productivity Index Method," International Journal of Business and Social Research, LAR Center Press, vol. 5(6), pages 1-11, June.
    6. Lin, Winston T. & Chuang, Chia-Hung, 2013. "Investigating and comparing the dynamic patterns of the business value of information technology over time," European Journal of Operational Research, Elsevier, vol. 228(1), pages 249-261.
    7. R Ramanathan, 2005. "Estimating energy consumption of transport modes in India using DEA and application to energy and environmental policy," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(6), pages 732-737, June.
    8. Lin, Winston T. & Kao, Ta-Wei (Daniel), 2014. "The partial adjustment valuation approach with dynamic and variable speeds of adjustment to evaluating and measuring the business value of information technology," European Journal of Operational Research, Elsevier, vol. 238(1), pages 208-220.
    9. Kenan Oğuzhan Oruç & Fatma Gül Altın, 2015. "The Effect of the 2007 Financial Crisis on the Information Technologies Sector: Application of Malmquist Productivity Index Method," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 5(6), pages 1-11, June.
    10. Shao, Benjamin B.M. & Lin, Winston T., 2016. "Assessing output performance of information technology service industries: Productivity, innovation and catch-up," International Journal of Production Economics, Elsevier, vol. 172(C), pages 43-53.

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