Information Technology and the American Productivity Resurgence By Dale W. Jorgenson Harvard University May 13, 2008 http://www.economics.harvard.edu/faculty/jorgenson The 2008 World Congress on National The 2008 World Congress on National Accounts and Economic Performance Measures Accounts and Economic Performance Measures for Nations for Nations Washington, D.C. ~ May 12-17, 2008
Information Technology and the American Productivity Resurgence By Dale W. Jorgenson Harvard University May 13, 2008 .
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Information Technology and the American Productivity Resurgence
By
Dale W. JorgensonHarvard University
May 13, 2008
http://www.economics.harvard.edu/faculty/jorgenson
The 2008 World Congress on National The 2008 World Congress on National Accounts and Economic Performance Accounts and Economic Performance
Measures for NationsMeasures for NationsWashington, D.C. ~ May 12-17, 2008
Economic Growth in the Information Age
INTRODUCTION:
Prices of Information Technology
ROLE OF INFORMATION TECHNOLOGY:
IT Prices and the Cost of Capital
WORLD GROWTH RESURGENCE:
IT Investment and Productivity Growth
ECONOMICS ON INTERNET TIME:
The New Research Agenda
THE INFORMATION AGE:Faster, Better, Cheaper!
MOORE'S LAW: The number of transistors on a chip doubles every 24 months. (The Tukwila Processor to be released later in 2008 will have more than two billion transistors.)
SIA Annual Report 2005: In 1978, a commercial flight between New York and Paris cost $900 and took seven hours. If the principles of Moore's Law were applied to the airline industry, that flight would now cost about a penny and take less than one second.
INVENTION OF THE TRANSISTOR:
Development of Semiconductor Technology.
THE INTEGRATED CIRCUIT:
Memory Chips; Logic Chips.
Source: No Exponential is Forever, Gordon Moore ftp://download.intel.com/research/silicon/Gordon_Moore_ISSCC_021003.pdf
HOLDING QUALITY CONSTANTMatched Models and Hedonics
SOFTWARE:
Prepackaged, Custom, and Own-Account.
SEMICONDUCTOR PRICE INDEXES:
Memory and Logic Chips.
COMPUTER PRICE INDEXES:
The BEA-IBM Collaboration.
COMMUNICATIONS EQUIPMENT:
Terminal, Switching, and Transmission.
Relative Prices of Computers and Semiconductors, 1959-2004All price indexes are divided by the output price index
Computers Memory Logic
0.0
0.1
1.0
10.0
100.0
1,000.0
10,000.0
100,000.0
1959 1964 1969 1974 1979 1984 1989 1994 1999 2004
Lo
g S
cale
(20
00=1
)
ROLE OF INFORMATION TECHNOLOGY:IT Prices, Investment, and Productivity.
CAPITAL CONTRIBUTION BY TYPE:
Computers, Communications Equipment, and Software.
INPUT SHARES OF IT:
Computers, Communications Equipment, and Software.
CAPITAL CONTRIBUTION:
IT vs. Non-IT Capital Services.
0.00
0.50
1.00
1.50
2.00
2.50
1960-1995 1995-2000 2000-2005
An
nu
al
Co
ntr
ibu
tio
n (
%)
Non-IT Capital Services IT Capital Services
U.S. Capital Input Contribution of Information TechnologyAnnual percentage growth rates, weighted by income shares
World Capital Input Contribution of Information TechnologyA
nn
ual
Co
ntr
ibu
tio
n (
%)
-1.00
-0.50
0.00
0.50
1.00
1.50
2.00
2.50
3.0019
89-1
995
1995
-200
020
00-2
005
1989
-199
519
95-2
000
2000
-200
5
1989
-199
519
95-2
000
2000
-200
5
1989
-199
5
1995
-200
020
00-2
005
1989
-199
519
95-2
000
2000
-200
5
1989
-199
519
95-2
000
2000
-200
5
1989
-199
5
1995
-200
020
00-2
005
1989
-199
519
95-2
000
2000
-200
5
World G7 DevelopingAsia
Non-G7 LatinAmerica
EasternEurope
Sub-Saharan
Africa
N. Africa& M.East
Non-IT Capital IT Capital
Annual percentage growth rates, weighted by income shares
G7 Capital Input Contribution of Information TechnologyA
nn
ual
Co
ntr
ibu
tio
n (
%)
0.00
0.50
1.00
1.50
2.00
2.5019
89-1
995
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
US Canada UK France Germany Italy Japan
Non-IT Capital IT Capital
Annual percentage growth rates, weighted by income shares
Developing and Transition Economy Contribution of Information TechnologyA
nn
ual
Co
ntr
ibu
tio
n (
%)
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
5.0019
89-1
995
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
Brazil China India Indonesia Mexico RussianFederation
SouthKorea
Non-IT Capital IT Capital
Annual percentage growth rates, weighted by income shares
WORLD GROWTH RESURGENCE: IT Investment and Productivity Growth.
LABOR INPUT GROWTH:
Hours Worked and Labor Quality.
TOTAL FACTOR PRODUCTIVITY:
IT-Production versus Non-IT Production.
SOURCES OF ECONOMIC GROWTH:
Capital Input, Labor Input, and TFP.
Annual percentage growth rates
-0.50
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
1960-1995 1995-2000 2000-2005
An
nu
al
Co
ntr
ibu
tio
n (
%)
Non-college Labor College Labor Non-IT Capital IT Capital Aggregate TFP
Sources of U.S. Economic Growth
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1960-1995 1995-2000 2000-2005
Non-IT Industries IT-Using Industries IT-Producing Industries
U.S. Industry Contributions to Productivity GrowthAnnual percentage growth rates with Domar weights
Annual percentage growth rates with Domar weightsChange in Contribution to Productivity: 2000-2005 Less 1960-1995, IT Users
-0.15 -0.1 -0.05 0 0.05 0.1 0.15 0.2
Nondeposit; Sec-com brokers;InvesMotion pictures
Research Insulated wire
Misc repairOther Instruments
Printing and reproductionOther Transportation equipmentTransportation svcs & Pipelines
Other Electrical machineryEducational services (private)
Ships and boatsLegal services
Audio and video equipGas utilities
PublishingAerospace
Measuring instrumentsMedical equipment and opthalmic goods
Machinery excl computersRadio and TV
Wholesale tradeMisc professional services
Social svc and membership orgAir transport.
Insurance carriers, ins agents, servicesBusiness svc exc computer
Telephone and telegraph
Sources of World Economic Growth
An
nu
al C
on
trib
uti
on
(%
)
-8.00
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.0019
89-1
995
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
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5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
World G7 Developing Asia Non-G7 Latin America Eastern Europe Sub-SaharanAfrica
N. Africa &M. East
Hours Quality Non-IT Capital IT Capital TFP
Annual percentage growth rates
Sources of G7 Economic GrowthA
nn
ua
l C
on
trib
uti
on
(%
)
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
5.001
98
9-1
99
5
19
95
-20
00
20
00
-20
05
19
89
-19
95
19
95
-20
00
20
00
-20
05
19
89
-19
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95
-20
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20
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-20
05
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95
-20
00
20
00
-20
05
19
89
-19
95
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95
-20
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-20
05
19
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-19
95
19
95
-20
00
20
00
-20
05
19
89
-19
95
19
95
-20
00
20
00
-20
05
US Canada UK France Germany Italy Japan
Hours Quality Non-IT Capital IT Capital TFP
Annual percentage growth rates
Sources of Growth for Developing and Transition EconomiesA
nn
ua
l C
on
trib
uti
on
(%
)
-10.00
-5.00
0.00
5.00
10.0019
89-1
995
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
1989
-199
5
1995
-200
0
2000
-200
5
Brazil China India Indonesia Mexico RussianFederation
South Korea
Hours Quality Non-IT Capital IT Capital TFP
Annual percentage growth rates
INTERMEDIATE RELEASE:
November 6, 2007
25 EU ECONOMIES:
U.S., Australia, Canada, Japan, and Korea
EU KLEMS PROJECT
COMPLETION DATE:
June 30, 2008
SOURCES OF DATA:
Labor, Capital, and Intermediate Inputs
IT PRODUCTION:
Permanent vs. Transitory Changes
IT UTILIZATION:
Trade and Services to the Fore
WORLD GROWTH OUTLOOK:
Potential for Growth Unchanged
THE U.S. AND THE WORLD ECONOMY:
Where Do We Stand?
THE NEW AGENDA:
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