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ICT Intermediates, Growth and Productivity Spillovers Evidence from Comparison of Growth Effects in German and US Manufacturing Sectors

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  • Thomas Strobel

Abstract

Recent pre-crisis growth accounting exercises attribute strong productivity growth to increased investments in information and communication technologies (ICT), especially during the mid-1990s. EU-wide stylized facts about a growing US–EU productivity gap are confirmed for Germany, particularly showing no substantially economy-wide effects from ICT for German sectors. Tracing the effect from ICT during the period 1991–2005, this study takes a different view by expanding the concept of value added to gross output, additionally including different types of intermediate inputs. The findings suggest that imported intermediate inputs played a more dominating role in Germany than in the US, particularly imported non-ICT and ICT materials, although domestically-produced ICT materials were important as well. In the US, main driving forces were domesticallyproduced non-ICT services and ICT materials, even though imported ICT materials were on the upraise post 1995. Moreover, there were decisive differences is countries’ TFP growth rates with about twice the size in the US. According to robust econometric analysis there have been strong spillover effects from increasing domestically-produced ICT materials in German TFP growth, while for the US TFP growth originated from increasing imported ICT materials. It will be argued that these different productivity effects stem from different functions of ICT in the production process. However, TFP growth differentials between Germany and the US during 1991 to 2000 are explained to a great extent by strong US TFP growth in the Electrical & Electronic Machinery sector.

Suggested Citation

  • Thomas Strobel, 2012. "ICT Intermediates, Growth and Productivity Spillovers Evidence from Comparison of Growth Effects in German and US Manufacturing Sectors," ifo Working Paper Series 123, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:ifowps:_123
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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