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Productivity growth in UK industries, 1970-2000: structural change and the role of ICT

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  • Nicholas Oulton
  • Sylaja Srinivasan

Abstract

This paper uses a new industry-level dataset to quantify the roles of structural change and information and communication technology (ICT) in explaining productivity growth in the United Kingdom, 1970-2000. The dataset is for 34 industries covering the whole economy, of which 31 industries are in the market sector. Using growth accounting, we find that ICT capital accounted for 13% of productivity growth in the market sector in 1970-79 (ie 0.47 percentage points out of 3.62% per annum growth of GDP per hour), 26% in 1979-90, and 28% in 1990-2000. In 1995-2000 the proportion rises to 47%. ICT capital, despite only being a small fraction of the total capital stock, contributed as much to growth as non-ICT capital in 1990-2000 and getting on for twice as much in 1995-2000. Econometric evidence also supports an important role for ICT. Total factor productivity (TFP) growth slowed down in 1995-2000, but we find econometric evidence that a boom in 'complementary investment', ie expenditure on reorganisation that accompanies ICT investment but is not officially measured as investment, could have led to a decline in the conventional measure of TFP growth.

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  • Nicholas Oulton & Sylaja Srinivasan, 2005. "Productivity growth in UK industries, 1970-2000: structural change and the role of ICT," Bank of England working papers 259, Bank of England.
    • Handle: RePEc:boe:boeewp:259
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    Cited by:

    1. Oulton, Nicholas, 2012. "Long term implications of the ICT revolution: Applying the lessons of growth theory and growth accounting," Economic Modelling, Elsevier, vol. 29(5), pages 1722-1736.
    2. Benoit Aubert & Blaize Horner Reich, 2009. "Extracting Value From Information Technologies," CIRANO Burgundy Reports 2009rb-04, CIRANO.
    3. Mauro Giorgio Marrano & Jonathan Haskel & Gavin Wallis, 2009. "What Happened To The Knowledge Economy? Ict, Intangible Investment, And Britain'S Productivity Record Revisited," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 686-716, September.
    4. Tosapol Apaitan & Nasha Ananchotikul & Piti Disyatat, 2017. "Structural Transformation in Thailand: A Perspective Through Product Innovation," PIER Discussion Papers 72, Puey Ungphakorn Institute for Economic Research.
    5. Isham, Amy & Mair, Simon & Jackson, Tim, 2021. "Worker wellbeing and productivity in advanced economies: Re-examining the link," Ecological Economics, Elsevier, vol. 184(C).
    6. Gilbert Cette & Yusuf Kocoglu & Jacques Mairesse, 2009. "Productivity Growth and Levels in France, Japan, the United Kingdom and the United States in the Twentieth Century," NBER Working Papers 15577, National Bureau of Economic Research, Inc.
    7. Sra Chuenchoksan & Don Nakornthab, 2008. "Past, Present, and Prospects for Thailand’s Growth: A Labor Market Perspective," Working Papers 2008-07, Monetary Policy Group, Bank of Thailand.
    8. Nicholas Oulton, 2007. "Ex Post Versus Ex Ante Measures Of The User Cost Of Capital," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(2), pages 295-317, June.
    9. Macallan, Clare & Millard, Stephen & Parker, Miles, 2008. "The cyclicality of mark-ups and profit margins for the United Kingdom: some new evidence," Bank of England working papers 351, Bank of England.
    10. Charlotta Groth, 2008. "Quantifying UK Capital Adjustment Costs," Economica, London School of Economics and Political Science, vol. 75(298), pages 310-325, May.
    11. Ludmila Fadejeva & Aleksejs Melihovs, 2010. "Measuring Total Factor Productivity and Variable Factor Utilization," Eastern European Economics, Taylor & Francis Journals, vol. 48(5), pages 63-101, September.
    12. Hashmat Khan & John Tsoukalas, 2011. "Effects of Productivity Shocks on Employment: UK Evidence (revised 25 February 2013)," Carleton Economic Papers 11-05, Carleton University, Department of Economics, revised 25 Feb 2013.

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