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The Swedish ICT Miracle - Myth or Reality

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Abstract

This paper investigates the relative labor productivity level for total manufacturing in Germany, Sweden and the US for the period 1980–2001. The paper also presents estimates of labor productivity levels for 18 different manufacturing industries for the period 1993–2000. The results show that the Swedish manufacturing productivity caught up with German and US productivity in the 1990s, overtaking the German level in 1995 and coming very close to the US level by the end of the 1990s. It has been argued that much of the Swedish surge in labor productivity during the second half of the 1990s was due to the spectacular growth of the Radio, television and communication equipment (RTC) (ISIC 32) industry. However, this paper shows that since 1998 Swedish RTC productivity has been declining relative to the corresponding industry in Germany and the US. Moreover, it is shown that the productivity growth of the ICT-producing industries is very sensitive to the value added price deflators used to calculate real value added growth rates. It is also shown that intermediate input prices have a large impact on the measured real value added growth for the Swedish Radio, television and communication equipment industry. It is argued that the accuracy of the price statistics for intermediate inputs is very uncertain for the Swedish Radio, television and communication equipment industry. Therefore estimates based on the US intermediate input price deflators suggest that the productivity growth of the Swedish Radio, television and communication equipment industry during the 1990s is partly a statistical artefact. This implies that the productivity growth of total manufacturing also has been overestimated.

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  • Edquist, Harald, 2004. "The Swedish ICT Miracle - Myth or Reality," SSE/EFI Working Paper Series in Economics and Finance 556, Stockholm School of Economics, revised 29 Mar 2004.
    • Handle: RePEc:hhs:hastef:0556
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    13. Edquist, Harald, 2005. "The Swedish ICT miracle -- myth or reality?," Information Economics and Policy, Elsevier, vol. 17(3), pages 275-301, July.
    14. Eliasson, Gunnar, 2004. "Ignorant Actors in the Resource Rich World of the Knowledge Based Economy - On Rational Management in an Experimentally Organized Economy (EOE)," Ratio Working Papers 47, The Ratio Institute.
    15. Kevin J. Stiroh, 2002. "Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?," American Economic Review, American Economic Association, vol. 92(5), pages 1559-1576, December.
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    Cited by:

    1. Harald Edquist, 2010. "Does hedonic price indexing change our interpretation of economic history? Evidence from Swedish electrification," Economic History Review, Economic History Society, vol. 63(2), pages 500-523, May.
    2. Harald Edquist & Magnus Henrekson, 2006. "Technological Breakthroughs and Productivity Growth," Research in Economic History, in: Research in Economic History, pages 1-53, Emerald Group Publishing Limited.
    3. Edquist, Harald, 2005. "Do hedonic price indexes change history? The case of electrification," SSE/EFI Working Paper Series in Economics and Finance 586, Stockholm School of Economics, revised 29 Apr 2005.
    4. Edquist, Harald, 2005. "The Swedish ICT miracle -- myth or reality?," Information Economics and Policy, Elsevier, vol. 17(3), pages 275-301, July.
    5. Thomas von Brasch, 2015. "The Norwegian productivity puzzle - not so puzzling after all?," Discussion Papers 796, Statistics Norway, Research Department.
    6. Sedika, Wesam M. & Emamb, Waleed, 2019. "The impact of ICT capital and use on economic growth," 2nd Europe – Middle East – North African Regional ITS Conference, Aswan 2019: Leveraging Technologies For Growth 201738, International Telecommunications Society (ITS).
    7. Kaitila, Ville, 2006. "Productivity, Hours Worked, and Tax/Benefit Systems in Europe and Beyond," Discussion Papers 1015, The Research Institute of the Finnish Economy.
    8. Md Shahiduzzaman & Allan Layton & Khorshed Alam, 2015. "On the contribution of information and communication technology to productivity growth in Australia," Economic Change and Restructuring, Springer, vol. 48(3), pages 281-304, November.
    9. Gabriel Moser & Wolfgang Pointner & Gerhard Reitschuler, 2004. "Economic Growth in Denmark, Sweden and the United Kingdom since the Start of Monetary Union," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 53-66.
    10. Elvio Mattioli e Giuseppe Ricciardo Lamonica, 2012. "Degree of integration and activation power of tourism in the European countries� economies: an input-output analysis," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - The Italian Journal of Economic, Demographic and Statistical Studies, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 66(2), pages 57-72.
    11. Lars Jonung & Jaakko Kiander & Pentti Vartia, 2008. "The great financial crisis in Finland and Sweden - The dynamics of boom, bust and recovery, 1985-2000," European Economy - Economic Papers 2008 - 2015 350, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    12. Edquist, Harald, 2013. "Can double deflation explain the ICT growth miracle?," Economics Letters, Elsevier, vol. 121(2), pages 302-305.
    13. Maryam Farhadi & Rahmah Ismail & Masood Fooladi, 2012. "Information and Communication Technology Use and Economic Growth," PLOS ONE, Public Library of Science, vol. 7(11), pages 1-7, November.

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    More about this item

    Keywords

    Information and communication technology (ICT); Productivity; Technological change; Value added deflators;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • 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

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