Abstract
The paper examines economic growth in old and new member countries of the European Union (EU-15 and EU-12) during the years of 1994–2000 and 2001–2008 mainly due to changes in information and communication technology (ICT) capital development. The first group EU-15 is presented by old EU countries and the second group EU-12 is presented by new member countries that joined the EU in 2004–2007. The threefactor Cobb-Douglas production function is estimated through the panel general least squares method. The input factors that might influence the economic growth are labour, ICT capital services and non-ICT capital services. Since ICT capital growth data are not available for all selected economies, the groups of countries were reduced to EU-14 and EU-7. The estimated panel production functions confirmed that the average growth of GDP in the EU-7 countries was supported by the stable growth of labour quantity and ICT-capital and increasing total factor productivity. A short-term drop in non-ICT capital growth with follow-up stagnation was caused rather by lower labour productivity. The research discovered that the drop in GDP growth in the EU-14 countries was a result of the slower growth of non-ICT capital and total factor productivity and the stagnated growth of ICT capital with low elasticity, and showed that even the compensation of growth in labour quality did not prevent a decrease in total factor productivity and economic growth.
Highlights
The impact of information and communication technology (ICT) on economic growth or labour productivity has been already discussed in many papers
– Production function elasticity with respect to labour quantity growth was higher in the EU-14 group during 1994–2000 and went up even more during the following time period, which differs from the EU-7 group where it stagnated
– Non-ICT capital growth with slightly higher elasticity in the EU-14 group was the most elastic input factor. The elasticity of this factor dropped in the following time period by 0.23% in the EU-14 group and by 0.27% in the EU-14 group, which led to lower economic growth and labour productivity
Summary
The impact of information and communication technology (ICT) on economic growth or labour productivity has been already discussed in many papers. Further research conducted at the state and corporate level rebutted the paradox and confirmed a positive impact of ICT capital. The goal of the paper is to add to the current literature discussing the impact of ICT capital services on economic growth of national economies and to provide an objective view of this impact with respect to two groups of countries – old and new EU member countries (EU-15 and EU-12) – during the time period of 1994–2000 and 2001–2008. The paper is organized as follows: Section 1 surveys the empirical literature on the role of ICT capital in economic growth. The last section concludes the key results of this research study
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