Paul Gretton (Australian Productivity Commission), Jyothi Gali

Effects of ICT Use on the Performance of Australian Firms: Evidence from a Business Longitudinal Data Set

Analysis of firm-level data from the Australian Business Longitudinal Survey shows positive and significant links between ICT use and productivity growth in manufacturing and a range of service industry sectors. This conclusion is not sensitive to changes in model specification or to the adoption of alternate measures of ICT use considered. Firm-characteristics were found to be important in identifying businesses using ICTs while significant interactions were also found between ICT use and complementary organisational characteristics (including skill, improved business practices and business restructuring) in raising productivity. Transition dynamics and time lags were of importance. After an initial productivity boost associated with the uptake of selected ICTs, productivity effects were estimated to have tapered off over time. Thus, the study suggests the ultimate productivity effects of a new innovation is a step up in levels, rather than a permanent increase in the rate of growth.

Keywords: productivity; information and communications technologies (ICTs); general purpose technology; firm-level analysis; economic growth

JEL Codes: D2, O3, O4

Session: 1a   Auditorium   Category: ICT - OECD Session

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