On the information and communication technologies - productivity nexus: a long-lasting adjustment period

This paper investigates the relationship between Information and Communication Technologies (ICT) and productivity within 240 industries from 8 OECD countries. Specifically, it aims at providing explanations for the coexistence of this strong technological evolution together with the absence of break in the productivity trend during the last decades. We calculate the total factor productivity changes and their components (technical progress and pure efficiency changes) over the period 1973-2005 using the Malmquist productivity index and we then relate these measures with data on ICT diffusion using regression trees. Our results suggest that ICT diffusion is accompanied by opposite movements that conceal the potential of these technologies. Indeed, we find evidence of a clearly identifiable positive relationship between computerization and technical progress, while ICT diffusion negatively affects pure efficiency changes. Our findings support the existence of an adjustment period and are consistent with the fact that the economies under consideration are still in a phase of adaptation.