ICT and Growth: A DEA Analysis of 14 OECD Countries

Abstract

This paper investigates the labour productivity performance of 14 OECD countries from 1995 to 2005. We use the non parametric Data Envelopment Analysis (DEA) technique in order to assess the impact of ICT capital on labour productivity we use two DEA models. In the first one, we consider the whole capital as an input, while in the second one the ICT capital is disembodied from the whole capital stock. Moreover, by introducing in the bootstrap setting, for the first time, the decomposition of the labour productivity developed by Kumar and Russell, we are able to investigate the effect of the ICT capital on the capital accumulation. The paper shows that labour productivity has significantly increased in two Asiatic countries, in US and in a restricted number of European countries. Thus our analysis seems to indicate the existence of increasing difficulties by the European countries to follow the Lisbon agenda objectives. Moreover, the paper points out the dual role played by the ICT capital. To one hand, it increases the labour productivity through capital accumulation to the other hand, it hampers, in the short run, the labour productivity by generating a negative technological change. So ICT capital appears as General Purpose Technology (GPT) which need for extensive complementary «investments» in tangible and intangible assets to reap the gains from it. Finally, the paper highlights a process of b-convergence among the 14 OECD countries in the labour productivity which is mostly driven by the process of capital accumulation.