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TopicsProductivity

With the broad-based slowdown in productivity growth that is affecting many OECD economies and beyond, the question is whether the current stage of the digital transformation can help strengthen productivity growth going forward. Earlier OECD work has found that digital technologies can have considerable impacts on productivity growth, but only when investments in ICT are combined with investments in complementary assets, such as skills, organisational changes and process innovations, i.e. knowledge-based capital.

For policy makers, the key point is that the digital transformation is already having important impacts on productivity growth at the firm and industry level. But ensuring that these impacts translate into broader-based, aggregate productivity growth may require additional action, to facilitate the necessary structural change in the economy, and to support firms and workers in the adjustment process.

Does technology increase productivity?

There is large potential for digital transformation to raise productivity, and thus growth and incomes. But this requires policies that help firms, whether large or small, put new technologies to work.

ICTs and productivity

The report The Next Production Revolution contains a chapter which examines how new information and communication technology (ICT) applications – in particular big-data analytics, cloud computing and the Internet of Things (IoT) – enable novel production and organisational processes, and business models, mainly in industrial sectors.

The chapter focuses on the productivity implications of new ICT applications in early adopting firms in a number of industries (including automotive and aerospace) but also in traditional sectors such as agriculture. 

It also provides an assessment of policy settings needed to realise the potential productivity and other benefits of digital technologies in production, while mitigating a number of associated risks.

Productivity indicators

The OECD Compendium of Productivity Indicators presents a broad overview of recent and longer term trends in productivity levels and growth across OECD countries and key partner economies.

It highlights key measurement issues faced when compiling cross-country comparable productivity indicators and describes the caveats needed in analyses. It examines the role of productivity as the main driver of economic growth and convergence, and the contributions of labour, capital and multifactor productivity. It looks at the contribution of individual industries or sectors as well as the role of firm size in productivity performance. It explores the link between productivity, trade and international competitiveness, and analyses trends as compared with cyclical patterns in labour and multifactor productivity growth.

Stimulating digital innovation

Digitalisation promises to boost productivity growth and economic competitiveness. Stimulating Digital Innovation for Growth and Inclusiveness: The role of policies for the successful diffusion of ICT, analyses the importance of the adoption and the effective use of information and communication technologies (ICTs) for enabling digital innovation for growth and inclusiveness, and discusses the role of public policies in stimulating such adoption and use. Given the emergence of a new digital divide caused by a possible breakdown of the “diffusion machine”, and given the strong interest of governments in furthering ICT adoption and use in particular by SMEs and disfavoured social groups, emphasis is put on policies stimulating ICT diffusion across society, i.e. ICT demand-side policies. This paper was a background report for the 2016 OECD Ministerial on the Digital Economy in Cancun, Mexico.

Statistics working paper

Can potential mismeasurement of the digital economy explain the post-crisis slowdown in GDP and productivity growth?

The digital economy has created some new measurement challenges for macroeconomic statistics and may have exacerbated some older ones, raising some concerns about the scope and estimation of GDP. Against a backdrop of slowing rates of measured productivity growth, this has raised questions about the conceptual basis of GDP and output, and whether current compilation methods are adequate to capture them (known as the mismeasurement hypothesis). This paper is intended to address immediate concerns about the potential scale of GDP mismeasurement in key areas where it is often suspected.

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