« Declining US Brand | Main | The incredible shrinking competitiveness agenda »
January 23, 2007
Productivity slowdown
The Conference Board released a report today that U.S. Labor Productivity Growth in 2006 was the Lowest in More than a Decade. Much of the concern was about a slowdown in the impact of information technology:
According to Dr. Bart van Ark, Director of International Economic Research at The Conference Board: "Over the past decade, information and communication technology has been a key driver of global productivity growth, but with these latest numbers one begins to wonder whether ICT's contribution has peaked. The significant fall in U.S. productivity growth is unlikely to be purely cyclical, and the modest European revival of productivity also points to the limited impact of technological change and patchy liberalization of product and labor markets in many countries."
However, according to the report, the "lull" in productivity could also be due to a transition phase to a second wave of ICT-driven productivity growth still to come.
Gail Fosler, Executive Vice President and Chief Economist of The Conference Board, said: "Today's business models have reached a certain level of technology saturation, and incentives for creating a second wave of applications are weak. But there are many industries, in particular in services, in which the potential for more productive technology use seems large. Future productivity gains may be waiting for a new generation of business applications."
More than just investment in new ICT will be required to capture this new productivity. Organizational changes will be needed as well. To quote Erik Brynjolfsson and Lorin Hitt "Computing Productivity: Firm-Level Evidence":
The results suggest that the observed contribution of computerization is accompanied by relatively large and time-consuming investments in complementary inputs, such as organizational capital, that may be omitted in conventional calculations of productivity.
The current policy debate in Washington is beginning to address the ICT investment issue. That is good. But where is the debate on ways to help investment in (and understanding of) those complementary inputs such as organization capital?
Posted by Ken Jarboe at January 23, 2007 11:40 AM
Trackback Pings
TrackBack URL for this entry:
http://www.athenaalliance.org/mt/mt-tb.cgi/1093