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Investment in Information and Communication Technologies: an Empirical Analysis

Author

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  • Cette, G.
  • Lopez, J.
  • Noual, P-A.

Abstract

Recent economic literature has identified sizeable differences across industrialised countries in the diffusion of Information and Communication Technologies (ICTs) throughout the production structure. This paper addresses the question of whether differences in the price elasticity of demand for ICTs could explain why Europe lags behind the United States in terms of ICT diffusion. We use annual macroeconomic data covering the period 1975-2001 and consider five countries: France, Germany, the Netherlands, the United Kingdom and the United States. Europe's lag in ICT diffusion does not appear to be linked to cross-country differences in the price elasticity of demand for ICT products. Our results suggest that at least part of the gap in ICT diffusion should be ascribed to more structural cross-country differences. The estimated value of the price-elasticity of computer hardware and software is generally lower than -1 which, given the decline in the relative price of these products, explains the increase in their share of investment expenditure and GDP. This situation is characteristic of a diffusion stage and is necessarily temporary.

Suggested Citation

  • Cette, G. & Lopez, J. & Noual, P-A., 2004. "Investment in Information and Communication Technologies: an Empirical Analysis," Working papers 116, Banque de France.
    • Handle: RePEc:bfr:banfra:116
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    Cited by:

    1. Antipa, P. & Cette, G. & Frey, L. & Lecat, R. & Vigna, O., 2008. "Recent trends in productivity: structural acceleration in the euro area and deceleration in the United States?," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 11, pages 33-50, Spring.
    2. Gilbert Cette & Jimmy Lopez, 2008. "What Explains the ICT Diffusion Gap Between the Major Industrialized Countries: An Empirical Analysis?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 17, pages 28-39, Fall.
    3. Pierre-Alain Muet, 2006. "Impacts économiques de la révolution numérique," Revue économique, Presses de Sciences-Po, vol. 57(3), pages 347-375.
    4. Gilbert Cette & Jimmy Lopez, 2012. "ICT demand behaviour: an international comparison," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(4), pages 397-410, June.
    5. Hyunbae Chun, 2007. "The Impact Of Information Technology On Labor Productivity Growth: Evidence From Five OECD Countries, 1970-1990," Korean Economic Review, Korean Economic Association, vol. 23, pages 5-32.

    More about this item

    Keywords

    ICT ; Investment ; Factor demand;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • R34 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Input Demand Analysis

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