ICT, Output and Productivity Growth in the United Kingdom: A Sectoral Analysis

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Abstract

This article uses a bottom-up growth accounting framework to quantify the sources of output and labour productivity growth across 11 sectors of the UK economy over 1993-2000, and investigates why the UK did not replicate the U.S. productivity boom despite similar levels of ICT investment. The analysis finds that ICT capital made a substantial contribution to output growth in the largest UK sectors and was a primary driver of labour productivity growth in all sectors except mining and quarrying. However, the UK’s weaker productivity performance relative to the United States is attributed mainly to slower accumulation of both ICT and non-ICT capital, rather than to TFP differences.

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