ICT intensity and New Zealand’s productivity malaise: Is the glass half empty or half full?

Abstract

This paper contributes to the conflicting international evidence on the impact of information and communication technology (ICT) on labour productivity (LP) growth. We examine the link between ICT intensity and New Zealand's LP growth in 29 industries over the period [1988][1989][1990][1991][1992][1993][1994][1995][1996][1997][1998][1999][2000][2001][2002][2003], and over relevant sub-periods. After deriving an ICT intensity index to classify industries into 'more ICT intensive' and 'less ICT intensive', we compare LP growth rates for these two industry categories. We also employ dummy variable regression models to more formally test the relationships between ICT intensity and LP growth. The results prove sensitive to the time period specified. When breaks in the data series are taken into account, there is support for the view that LP growth of more ICT intensive industries has improved over time relative to that of other industries, even though overall LP growth was weak. Lack of LP growth per se, therefore, is not necessarily evidence against the beneficial productivity impacts of ICT.

Impact of information technology on productivity and efficiency in Iranian manufacturing industries

“…Ark et al (2002) have used the same classification by some modifications. Engelbrecht and Xayavong (2006) have calculated the direct requirements of IT inputs for each industry using Input-Output table to classify the industries in New Zealand.…”

The Elusive Contribution of Ict to Productivity Growth in New Zealand: Evidence From an Extended Industry-Level Growth Accounting Model

“…It complements an earlier paper (i.e. Engelbrecht and Xayavong, 2006) that describes the derivation of the distinction between the two types of industries using NZ-specific data and reports results from LP growth difference-in-difference regressions. The earlier findings were supportive of the view that LP growth of more ICT intensive industries has improved over time relative to that of other industries, even though overall LP growth has been weak.…”

“…This paper provides further suggestive evidence, derived using a different methodology and a closer alignment of sub-periods to business cycles, supporting the conclusion about the differential productivity impacts of more ICT intensive industries in NZ. However, for LP growth they seem to have occurred later than suggested by Engelbrecht and Xayavong (2006), i.e. only from the late 1990s and not from the early 1990s onwards.…”

“…A comment is required on the inclusion of intermediate inputs. Like in Engelbrecht and Xayavong (2006), we prefer gross output based, instead of net output (i.e. value added) based, LP and TFP growth measures.…”

“…Data on the values and volumes series of production and income accounts were available for the period 1988-2001. Those for 2002 and 2003 had to be constructed using the same technique as that employed in Engelbrecht and Xayavong (2006). 6 All volumes series are measured in 1995/96 prices.…”