THE ELUSIVE CONTRIBUTION OF ICT TO PRODUCTIVITY GROWTH IN NEW ZEALAND: EVIDENCE FROM AN EXTENDED INDUSTRY-LEVEL GROWTH ACCOUNTING MODEL

Abstract

This paper explores the impacts of Information and Communication Technologies (ICT) on economic growth in New Zealand. Using an extended industry-level growth accounting model to analyse the proximate sources of growth in per capita output, we focus on differences in total factor productivity (TFP) growth and its sub-components, as well as other major components of labour productivity (LP) growth, that emerge between ‘more ICT intensive’ and ‘less ICT intensive’ industries. Employing, alternatively, gross output and net output data, we find great differences and distinct patterns in the growth contributions of the two types of industries. However, the quest to find evidence of positive ICT impacts is still somewhat elusive. Although TFP growth of more ICT intensive industries has steadily increased in importance over time, ‘pure’ or within-industry productivity effects are smaller than structural change effect, and LP growth has only accelerated in recent years.