Information and Communication Technologies (ICT) and economic performance

We are examining the direct impact of Information and Communication Technologies (ICTs) on productivity and whether this relationship varies by firm size, ownership, industry, region and time. For example, is the impact of ICT on performance larger for US multinationals than for domestic UK firms? We will also examine "complementarities" between IT, skills and innovation. For example, does IT have a larger impact on productivity in environments where workers are more skilled?

We are building a panel of ICT information on many thousands of UK firms between 1994 to 2004 that tracks the types of hardware and software used. This coves all sectors of the economy and all sizes of company. This will give us information on the productivity, profitability and market value of our firms. We will also combine this with the management survey to examine whether the returns to ICT are zero or even negative in badly managed firms.

We are also interested in what determines the pattern of ICT diffusion. For example, what role, if any, has the tax system played in the introduction of new technologies? What other policies (such as Broadband roll-out) are important? Can these different policies be sued as "natural experiments" to test the causal impact of ICT on performance?

With ONS (funded by DTI) we are separately examining the establishment level impact of hardware and software investments on productivity. [PDF reference]. We have found a strong association between hardware investments and productivity. We find that IT accounts for a substantial part of the higher productivity enjoyed by US multinationals who appear not only to spend more on IT, but importantly get a much bigger 'bang per buck' of their IT spending. Further, this affect is particularly strong in the sectors that have enjoyed a productivity acceleration in the US since 1995 (the 'ICT intensive sectors' such as wholesale, retail). For more information on this ONS/CEP workstream see:

Americans Do I.T. Better: US Multinationals and the Productivity Miracle

Are US firms really better at investing and managing their IT? Through the interdisciplinary Box Centre, we are investigating the mechanisms through which ICT can enable improvements in organisational performance. For further information on BOX - the laboratory for innovation research - see the EDS Innovation Research Programme and its discussion papers and reports.

Discussion papers on ICT and productivity include:

Nick Bloom, Raffaella Sadun and John Van Reenen, Americans Do I.T. Better: US Multinationals and the Productivity Miracle
Gustavo Crespi, Chiara Criscuolo and Jonathan Haskel, Information Technology, Organisational Change and Productivity Growth: Evidence from UK Firms
Raffaella Sadun and John Van Reenen Information Technology and Productivity: It ain't what you do it's the way that you do I.T.
Nicholas Oulton and Sylaja Srinivasan, Productivity Growth and the Role of ICT in the United Kingdom: An Industry View, 1970-2000
Ralf Martin, Globalisation, ICT and the Nitty Gritty of Plant Level Datasets

A summary of the evidence on IT and productivity is available in CEP Discussion Paper 749

For further information contact Mirko Draca

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