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Information technology and Australia's productivity surge

Staff research paper

This paper by Dean Parham, Paul Roberts and Haishun Sun was released on 11 October 2001. It examines the role of Information and Communication Technologies (ICTs) in Australia's productivity growth and to compares the strength of that role with observations of the US. A related objective is to form a view on whether the US experience suggests that a second ICT-related wave of productivity acceleration lies ahead for Australia (or is already in evidence) and whether the production or use of ICTs is essential to catch that wave.

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The rapid uptake of information and communication technologies (ICTs) contributed to Australia's very strong productivity performance in the 1990s. Indeed, the contributions of ICTs to labour productivity growth in the 1990s was at least as strong in Australia as it was in the US.

These are two of the key findings from the latest Productivity Commission staff research paper, Information Technology and Australia's Productivity Surge.

The paper shows that Australia has benefited from the use of ICTs. Australia has been very quick on the uptake of ICTs by international standards. Whilst ICT production added up to 0.3 of a percentage point to US productivity growth, Australia generated a productivity improvement of 1.1 percentage points from ICT use and other factors. Policy reforms have played a role in encouraging the faster uptake of ICTs and facilitating business restructuring to tap the productivity gains that using ICTs can bring.

Background Information

02 6240 3330

Cover, Copyright, Contents, Acknowledgments, Abbreviations, Key messages

Analysing the productivity gains from ICTs
The message from US studies — gains come from use and not just production
Australia is an advanced ICT user, not producer
ICT contributions to productivity growth — the US and Australia compared
An industry perspective

1 Introduction
1.1 The dawn and demise of the 'new economy'?
1.2 Australia and the new economy paradigm
1.3 Objectives and scope of the paper

2 Australia's production and use of ICTs
2.1 Measurement of ICTs
2.2 Indicators of production and use of ICTs
2.3 Summary and assessment

3 The growth accounting framework
3.1 Accounting for output growth
3.2 Accounting for productivity growth
3.3 Capturing quality changes
3.4 Capturing the gains from ICTs in theory and practice

4 The US evidence
4.1 The contribution to US output growth
4.2 The contribution to US productivity growth
4.3 Summary

5 Contribution of IT in Australia
5.1 The growth of IT in Australia
5.2 Contribution to output growth
5.3 Contribution to productivity growth
5.4 Industry perspective
5.5 Summary

A Australia's production and use of ICTs

B IT use and productivity trends
B.1 Prices
B.2 Growth in IT investment
B.3 IT productive capital stock
B.4 Capital income
B.5 Industry IT use
B.6 Industry IT use and productivity growth