ICT capital and service complementarities: The Italian evidence

This paper investigates whether ICTs hardware and services play a complementary role in boosting economic growth. The main argument is that investments in ICTs fixed capital are a necessary but not sufficient condition leading to productivity gains, above all in late adopter countries. Their effective implementation indeed requires on the one hand a changing economic structure characterized by a growing weight of service sectors, on the other hand complementary investments in ICTs services, directed to ease the integration of the new technologies within firms' boundaries. The analysis is conducted on a late-industrialized country like Italy, and shows that in lagging countries the weak impact of ICTs adoption is the result of three converging forces: relatively high share of manufacturing sectors, low adoption levels of ICTs in traditional manufacturing sectors, inadequate investments in ICTs services.