ICT productivity and firm propensity to innovative investment: learning effect evidence from italian micro data

TitleICT productivity and firm propensity to innovative investment: learning effect evidence from italian micro data
Publication TypeWorking Paper
Year of Publication2004
AuthorsG. Atzeni, OA. Carboni
Number2004_14
Keywordsgrowth, information and communication technologies, investment behaviour, productivity, replacement
Abstract

This work attempts to shed light on the “information technology productivity paradox”. Employing a large data set of Italian manufacturing firms we compute ICT marginal productivity across different cluster of firms and the impact of information and communication technology (ICT) on output growth. Following Yorukoglu’s (1998) vintage capital idea, in which ICT is associated with consistent learning-by-doing effect, we explore whether firm capital replacement/introduction behaviour and firm’s technological investment aptitude have any role in explaining ICT productivity. We find that low capital replacement (high capital introduction) yields to sensibly greater ICT marginal revenues compared to high replacement (low capital introduction). However, what really matters in explaining ICT productivity is the level of innovation the new capital embodies. In fact, for non-innovative firms the ICT paradox is far less consistent. This strongly suggests the existence of learning by doing effects. In terms of growth contribution we find that ICT have an impact disproportionately wide compared to the share in total investment they represent.

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