EH.Net Abstracts in Economic History

                ABSTRACTS IN ECONOMIC HISTORY
                     (c) 2004 EH.Net
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Name: Ronald Albers
Email: ronald.albers at cec.eu.int
Institution: European Commission

Co-author: none

Title: The Origins of the "New Economy": Comparisons and Pitfalls

Internet Address of abstracted work: not available 

By mail:
European Commission
DG Ecfin B2
Office BU-1 01/111
B-1049 Brussels, Belgium

Language: English

Abstract:
This paper contrasts the impact of information and communication
technologies (ICT) on productivity in the eurozone and the United States
with historical evidence on earlier general purpose technologies, notably
steam and electricity. Such comparisons have become popular in recent
economics literature, but the empirical basis is often thin. At first
sight, long-run data on the United States, Britain and the Netherlands
suggest a productivity impact of ICT which resembles that of steam and
electricity. The impact of new technologies is limited initially to a few
sectors, while aggregate effects appear only with a substantial delay. 

However, the paper argues that there are also some important differences,
which distinguish ICT from earlier technological episodes. These concern
the speed of diffusion, productivity growth within "leading sectors," the
size of relative price declines, the sectoral pattern of diffusion,
cyclical factors and, perhaps most importantly, the interaction between
technology and institutions that render any historical comparison
hazardous. All in all, the data give little support for the claims of the
more radical "new economy" enthusiasts. It does still leave us, however,
with a variant of the well-worn Solow paradox: if new technologies are
important determinants of economic performance (and to that view I largely
subscribe), why has their measured impact on overall productivity been so
limited so far and why does it take so long for the effects to become
visible in the macro-economic aggregates? In the remainder of this
contribution I offer a perspective from a long-term point of view. These
reflections do not so much intend to resolve the paradox, but may help to
put developments into a more proper perspective. I would say that what
follows is not at all original but rather follows by-now familiar lines
(see the seminal contribution by David (1990). 

Bibliography: Albers, Ronald. "The Origins of the "New Economy": Comparisons and Pitfalls." 

Subject: D
Geographical Area: 0
Country/Region: US & Europe
Time Period: 0

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