Productivity Growth in UK Industries, 1970-2000: Structural Change and the Role of ICT

53 Pages Posted: 19 Oct 2005

See all articles by Nicholas Oulton

Nicholas Oulton

London School of Economics - Centre for Macroeconomics(CFM)

Sylaja Srinivasan

Bank of England - Monetary Analysis

Date Written: May 2005

Abstract

This paper uses a new industry-level dataset to quantify the roles of structural change and information and communication technology (ICT) in explaining productivity growth in the United Kingdom, 1970-2000. The dataset is for 34 industries covering the whole economy, of which 31 industries are in the market sector. Using growth accounting, we find that ICT capital accounted for 13% of productivity growth in the market sector in 1970-79 (ie 0.47 percentage points out of 3.62% per annum growth of GDP per hour), 26% in 1979-90, and 28% in 1990-2000. In 1995-2000 the proportion rises to 47%. ICT capital, despite only being a small fraction of the total capital stock, contributed as much to growth as non-ICT capital in 1990-2000 and getting on for twice as much in 1995-2000. Econometric evidence also supports an important role for ICT. Total factor productivity (TFP) growth slowed down in 1995-2000, but we find econometric evidence that a boom in 'complementary investment', ie expenditure on reorganisation that accompanies ICT investment but is not officially measured as investment, could have led to a decline in the conventional measure of TFP growth.

Keywords: Productivity, TFP, ICT, structural change

JEL Classification: O47, O52, D24

Suggested Citation

Oulton, Nicholas and Srinivasan, Sylaja, Productivity Growth in UK Industries, 1970-2000: Structural Change and the Role of ICT (May 2005). Bank of England Working Paper Series No. 259. Available at SSRN: https://ssrn.com/abstract=824104 or http://dx.doi.org/10.2139/ssrn.824104

Nicholas Oulton

London School of Economics - Centre for Macroeconomics(CFM) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

HOME PAGE: http://https://ideas.repec.org/e/pou3.html

Sylaja Srinivasan (Contact Author)

Bank of England - Monetary Analysis ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

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