ICT use and productivity: A synthesis from studies of Australian firms
ICT use and productivity: A synthesis from studies of Australian firms
Commission research paper
This paper was released on 13 July 2004 and draws together the findings from different streams of work undertaken for the Australian contribution to an international study (coordinated by the OECD) of the uptake of information and communications technology (ICT) and its effects on productivity.
It also draws on the completed OECD study in order to provide a more comprehensive picture of how well Australian firms have performed, relative to their overseas counterparts.
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ICT Use and Productivity: A Synthesis from Studies of Australian Firms (ZIP 694.6 KB)Compared with their overseas counterparts, Australian firms have been active in their uptake of ICT and successful in their efforts to turn it to productive advantage.
Australian firms invested more in ICT, especially from the mid-1990s, as technological advances provided cheaper and readier access to more accurate, timely and useful information.
The gains from use of ICT stem from the opportunities it provides firms:
- to undertake existing tasks more quickly, cheaply and effectively by substituting ICTs for other inputs, especially labour; and
- to improve multifactor productivity (the efficiency and effectiveness of input use) by using ICTs as a means to innovate - to develop and introduce new value-adding and efficiency-enhancing products, processes and organisational structures.
Many of these gains do not come automatically - from the mere purchase and installation of new hardware and software.
- There can be costly and time-consuming adjustments, for example, in staff dislocation and (re)training.
- Product, process and organisational innovations require investments in design, development and implementation.
- Skilled staff and high-order management skills and qualities are needed if potential gains are to be realised.
- The gains also depend on the accumulation of experience in and learning from the application of ICTs and from the investments in ICT-enabled innovations.
The acceleration in use of ICT in the 1990s raised the rates of growth in Australia's labour productivity and multifactor productivity.
- Although the available estimates suggest that the acceleration in use of ICT contributed a relatively small amount to Australia's 1990s productivity acceleration, the estimated productivity gains (especially in multifactor productivity) are high by international standards.
Firms and industries differ in the intensity of their use of ICTs and in their realisation of productivity gains.
- This is largely due to differences in the nature and amount of their investment in ICT-enabled innovation, in their access to skilled staff and management, and in their accumulation of learning and experience.
Countries differ in the intensity of ICT use and associated productivity gains.
- This is largely due to differences in costs of using ICT, in the ability of firms to absorb new technology and in the policy and institutional environments in which firms operate.
Tapping ICT's future productivity potential is predominantly in the hands of firms.
- Whilst specific issues require ongoing government attention, the strong performance of Australian firms suggests that additional widespread government support is not warranted. The main role for governments remains one of ensuring that markets are competitive, firms have flexibility to adjust and to experiment, innovation is appropriately supported and needed skills are developed.
