Scandinavian Working Papers in Economics
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Research Institute of Industrial Economics (IFN) Working Paper Series

No 1073:
Swedish Lessons: How Important are ICT and R&D to Economic Growth?

Harald Edquist () and Magnus Henrekson ()

Abstract: We investigate to what extent ICT and R&D capital is associated with value added growth in the Swedish business sector. By estimating output elasticities based on data for 47 different industries for the period 19932012 we show that ICT and R&D capital are significantly associated with value added for most specifications. We also divide ICT capital into hardware and software capital. To our knowledge, this distinction has not been made in any previous study at the industry level. In this case only the estimated elasticity of software is significantly different from zero. Finally, we use the growth accounting framework to compare the contribution from ICT and R&D to value added growth when output elasticities are based on either income shares or weighted least squares (WLS) estimates. The contribution of ICT to value added growth increases from 0.9 to 1.5 percentage points when WLS estimates are used instead of income shares.

Keywords: ICT; R&D; Software capital; Hardware capital; Industrial change; Panel data; (follow links to similar papers)

JEL-Codes: O14; O32; O33; O47; (follow links to similar papers)

35 pages, June 8, 2015, Revised February 27, 2017

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This paper is published as:
Edquist, Harald and Magnus Henrekson, (2017), 'Swedish Lessons: How Important are ICT and R&D to Economic Growth?', Structural Change and Economic Dynamics, Vol. 42, September, pages 1-12

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