gALP in the euro zone

Here is my third article of a series on Economics of Growth, titled "growth on average labour productivity in the euro zone". You can read the article's first paragraphs here.

Download the full article on PDF or LIT formats. LIT files can be read using Microsoft reader on any Pocket PC device.

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From the mid 1990s to 2000, the USA experienced a growth on average labour productivity (gALP) and on employment (gE). Some studies try to explain the role of information and communication technologies (ICT) on making both those achievements possible, but few have focused in the Euro zone. Among the reasons for existing less Euro area studies, is the quality of the (un)available data, which sometimes only accounts the private sector, hence not being directly comparable to official national statistics, because of different methodologies.

On its working paper #122, dated February 2002, the European Central Bank (ECB) tries to compensate the situation by studying some EU countries, based on data from OECD and from national accounts, comparing such evidence with known data for the USA.

gALP is possible either by capital deepening (an increase in the amount of capital available per hour worked) or by gains in total factor productivity (gTFP), but while the first can be measured directly, the second can not. However, estimating gTFP can suggest interesting relations; for example, if a study finds that gALP is due to gTFP – the growth that can’t be explained just by higher labour or capital inputs –, than can signal the general-purpose nature of some technology, which is spilling-over across sectors.
ECB’s paper questions the general-purpose characteristics of ICT, by (1) directly accounting the contribution of ICT capital for gALP, and (2) estimating gTFP, by checking data for (and making a difference between) intensive ICT using sectors (ICTu) and intensive ICT producing sectors (ICTp).

According to OECD, an ICTp industry can be one manufacturing office, accounting, computing and communications machinery; or one providing computer based services, including communication services.
ICTu sectors are roughly considered the ones having a significant (relative to their output) investment on ICT capital. However, I think that this can be a misleading classification, as referred by many other papers; in fact I am just remembering Keith Smith’s words – «there is no such thing as a low tech industry» – when I had the chance to listen to him, participating on the lecture titled «Innovation policy in the globalizing learning economy», at ISEG, Lisbon, Portugal, on 2002-11-15.

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You might enjoy reading the following book:

title: An Introduction to Efficiency and Productivity Analysis  
publisher: Kluwer Academic Publishers
authors: Tim Coelli, D.S. Prasada Rao, George E. Battese

Best possible prices are:

for european costumers: http://www.amazon.co.uk (58.75£ ~ 85.37€*) [direct link to item]

for american costumers: http://www.amazon.com (88.00 USD) [direct link to item]

*considering 1£ = 1.45313€