Working Paper Series
Do R&D and ICT Affect Total Factor Productivity Growth Differently?
() and Magnus Henrekson
Abstract: We analyze the effect of ICT and R&D on total factor
productivity (TFP) growth across different industries in Sweden. R&D alone
is significantly associated with contemporaneous TFP growth, thus
exhibiting indirect effects. Although there is no significant short-run
association between ICT and TFP, we find a positive association with a lag
of seven to eight years. Thus, R&D affect TFP much faster than
ICT-investments. We also divide ICT capital into hardware and software
capital. To our knowledge, this distinction has not been made in any
previous study analyzing TFP at the industry level. The results show that
lagged hardware capital services growth is significantly associated with
TFP growth. Hence, investments complementary to hardware are needed to reap
the long-run TFP effects from reorganizing production.
Keywords: ICT; R&D; Hardware; Software; Total factor productivity; Panel data analysis; (follow links to similar papers)
JEL-Codes: L16; O33; O47; (follow links to similar papers)
34 pages, February 8, 2016, Revised November 28, 2016
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- This paper is published as:
Edquist, Harald and Magnus Henrekson, (2017), 'Do R&D and ICT Affect Total Factor Productivity Growth Differently?', Telecommunications Policy, Vol. 41, No. 2, pages 106-119
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