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It’s Not What You Make, It’s How You Use IT: Measuring the Welfare Benefits of the IT Revolution Across Countries

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  • Mr. Tamim Bayoumi
  • Mr. Markus Haacker

Abstract

This paper analyzes the welfare benefits from falling relative prices of IT (information technology) goods across a wide range of countries. We find, using two separate methodologies and datasets, that welfare benefits mainly accrue to users of IT, not their producers, because of falling relative prices. This is important, as IT production and use are highly differentiated across countries, and implies that earlier work on how IT production affects real GDP, while useful in calibrating the overall benefits of the IT revolution, are a less valuable way of assessing the distribution of benefits.

Suggested Citation

  • Mr. Tamim Bayoumi & Mr. Markus Haacker, 2002. "It’s Not What You Make, It’s How You Use IT: Measuring the Welfare Benefits of the IT Revolution Across Countries," IMF Working Papers 2002/117, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2002/117
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    Cited by:

    1. Rob Alessie & Agar Brugiavini & Guglielmo Weber, 2006. "Saving and Cohabitation: The Economic Consequences of Living with One's Parents in Italy and the Netherlands," NBER Chapters, in: NBER International Seminar on Macroeconomics 2004, pages 413-457, National Bureau of Economic Research, Inc.
    2. Elaine Ramsey & Derek Bond, 2007. "Evaluating Public Policy Formation and Support Mechanisms for Technological Innovation," International Review of Applied Economics, Taylor & Francis Journals, vol. 21(3), pages 403-418.
    3. Oleksiy Mazhelis & Pasi Tyrväinen, 2012. "Economic aspects of hybrid cloud infrastructure: User organization perspective," Information Systems Frontiers, Springer, vol. 14(4), pages 845-869, September.
    4. R. Nahuis & H. van der Wiel, 2005. "How Should Europe’s ICT Ambitions look like? An Interpretative Review of the Facts," Working Papers 05-22, Utrecht School of Economics.
    5. Francesco Venturini, 2009. "The long-run impact of ICT," Empirical Economics, Springer, vol. 37(3), pages 497-515, December.
    6. Parham, Dean, 2005. "Les gains de productivité au moyen de l’usage des technologies de l’information : l’expérience australienne," L'Actualité Economique, Société Canadienne de Science Economique, vol. 81(1), pages 143-164, Mars-Juin.
    7. Brainerd, Elizabeth & Menon, Nidhiya, 2014. "Seasonal effects of water quality: The hidden costs of the Green Revolution to infant and child health in India," Journal of Development Economics, Elsevier, vol. 107(C), pages 49-64.
    8. Catherine L. Mann, 2012. "Information Technology Intensity, Diffusion, and Job Creation," Working Papers 46, Brandeis University, Department of Economics and International Business School.
    9. Crafts, Nicholas, 2004. "The world economy in the 1990s: a long run perspective," Economic History Working Papers 22334, London School of Economics and Political Science, Department of Economic History.
    10. Crafts, Nicholas, 2004. "Social savings as a measure of the contribution of a new technology to economic growth," Economic History Working Papers 22554, London School of Economics and Political Science, Department of Economic History.
    11. Niek Nahuis & Ben Geurts, 2004. "Helping thy neighbour: productivity, welfare and international trade," International Trade 0404008, University Library of Munich, Germany.

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    More about this item

    Keywords

    WP; IT goods; real GDP; GDP; Technological change; information technology; terms of trade; welfare benefits; demand curve; GDP deflator; EDP goods; ITC goods; hedonic price indices; Price indexes; Total factor productivity; Africa;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • 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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