digital technologies and their impact on industry productivity performance dean parham and peace...

Digital technologies and their impact on industry productivity performance

Dean Parham and Peace Segarajasekeran15 September 2015

BCR’s digital productivity project

>Digitisation everywhere>We know ICTs had productivity-enhancing effects

in the 1990s– jointly with economic reforms

>Where are we now?

BCR’s Digital Productivity Project

>Productivity growth slower – Aust & RoW>Why?– Fewer ICT/digitally based opportunities?– Opportunities not being realised?– Gains being swamped by other factors?– Gains not being measured?

BCR’s Digital Productivity Project

>Primer released>Update growth accounting– Based on ABS national accounts data

>Case studies>Firm-level econometric analysis>Tackle the hard measurement issues

Growth accounting

LABOUR PRODUCTIVITY GROWTH

MFP growth

Capital deepening

Non-ICT capital

deepening

ICT capital deepening

Increasing the ratio of capital to labour

Product & process innovations

ICT• disruptive change• gen purpose tech

Previous work – PC (2004)

Labour productivity growth: 3.2 %paCapital deepening: 1.3 pp

ICT capital deepening 1.0 pp (30%)Hardware 0.6 ppSoftware 0.3 pp

Non-ICT capital deepening 0.4 ppMFP growth 1.8 pp

Over 1993-94 to 1998-99

Estimates not for quotation

Broad trends: net capital stocks

Jan-1980

Jan-1982

Jan-1984

Jan-1986

Jan-1988

Jan-1990

Jan-1992

Jan-1994

Jan-1996

Jan-1998

Jan-2000

Jan-2002

Jan-2004

Jan-2006

Jan-2008

Jan-2010

Jan-2012

Jan-2014

0

10000

20000

30000

40000

50000

60000

70000

Hardware

Software

Electrical & elec-tronic equipment

Entire economy

Jan-1980 Jan-1985 Jan-1990 Jan-1995 Jan-2000 Jan-2005 Jan-20100

100020003000400050006000700080009000

Finance

Jan-1980 Jan-1985 Jan-1990 Jan-1995 Jan-2000 Jan-2005 Jan-20100

100020003000400050006000700080009000

10000

Info, media, tele-coms

Jan-1980 Jan-1985 Jan-1990 Jan-1995 Jan-2000 Jan-2005 Jan-20100

100020003000400050006000700080009000

10000

Wholesale

Jan-1980 Jan-1985 Jan-1990 Jan-1995 Jan-2000 Jan-2005 Jan-20100

2000

4000

6000

8000

10000

Retail

Jan-1980 Jan-1985 Jan-1990 Jan-1995 Jan-2000 Jan-2005 Jan-20100

100020003000400050006000700080009000

10000

Manufacturing

Broad trends

1993-94 to 2003-042003-04 to 2013-14

LP growth (%pa) 3.1 2.1

Capital deepening 1.3 2.2

ICT cap deep yy/2 ??̴

Non-ICT cap deepMFP growth 1.8

-0.1

Estimates not for quotation

Big differences across industries – ICT capital deepening

1990s 2000s

Manufacturing 0.7 0.6Wholesale 1.1 0.9/0.4 (late)Retail 0.6 0.6/0.2 (late)Info, media, comms 1.4 1.0Financial 1.7 1.5/0.7 (late)Prof, scien, tech 0.4 0.4

Estimates not for quotation

A new element: ICT and capital productivityNon-ICT capital productivity growth:Manufacturing:

-23%Wholesale

7% ??Retail

27%Info, media, telecoms 2%Finance

125%

Over 1989-90 to 2013-14

Estimates not for quotation

ICT and capital productivity

Assets:> Land>Buildings>Road vehicles> Inventories

(Very) tentative conclusions

> Growth in use of ICTs has continued in the 2000s> But slowed down after 2007-08

– especially hardware

> Greater use of software in the 2000s> Slower rate of ICT capital deepening on average> Effect of ICTs on productivity of other assets has been

overlooked– high correlation with ICT use in some industries/assets– no improvement in capital productivity in manufacturing