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

• Published in: Information economics and policy Vol. 18; no. 1; pp. 24 - 42
• Main Authors: Engelbrecht, Hans-Jürgen, Xayavong, Vilaphonh
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.03.2006; Elsevier; Elsevier Sequoia S.A
• Series: Information Economics and Policy
• Subjects: Comparative studies; Correlation analysis; Economic conditions; Economic growth; Empirical tests; ICT intensive industries; Impact analysis; Industrial production; Information and communication technologies; Information and communication technology; Information technology; Labour productivity; Labour productivity growth; New Zealand; Productivity; Productivity growth; Regression analysis; New Zealand; ICT intensive industries; New Zealand; Labour productivity growth; O47; O50; Information and communication technology
• ISSN: 0167-6245; 1873-5975
• DOI: 10.1016/j.infoecopol.2005.04.001

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 1988–2003, 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.