The productivity paradox and the diffusion of generic technologies

Abstract

– The productivity paradox poses the problem of the coexistence, since the seventies, of a slowing down of productivity gains and an acceleration of technical progress, in particular in the field of information technologies (IT). The existence of delays between the arrival of a new technology and the realisation of productivity gains constitutes one explanation of the paradox. In this article, we present a simulation model which illustrates the relations between the diffusion of a generic technology and the dynamics of the productivity gains at the macroeconomic level. In this model, the diffusion of a new generic technology is a process marked by positive feedback; any obstacle to the diffusion also hinders the pace of learning which, in turn, slows down the process of diffusion. A low rate of the diffusion of the knowledge among the sectors of the economy slows the diffusion down. In a similar way, the heterogeneity of the stock of capital and the problems of technological compatibility resulting from it make the full potential of the new technology more difficult to obtain.