EconPapers    
Economics at your fingertips  
 

Digitalization and Productivity Growth Slowdown in Production Networks

Ali Sen

Janeway Institute Working Papers from Faculty of Economics, University of Cambridge

Abstract: I examine the recent productivity growth slowdown and the emergence of digital technologies through the lens of production networks. Digital technologies are increasingly embedded in intermediate inputs, and digital-intensive sectors, often key producers of intermediate and capital goods, amplify the positive effects of these technologies across industries. I show that the slowdown in computer-specific technical change has contributed to the decline in aggregate productivity growth, particularly in digital-intensive service industries, with these effects spreading through the economy via intersectoral linkages. My estimates suggest that this accounts for around 45–55% of the productivity growth slowdown in both the UK and the US since the mid-2000s. I attribute this slowdown largely to structural changes within the computers industry, especially the rising value-added intensity of the sector. In general, production in digital technology-producing industries is characterized by perfect complementarity, explaining the waning effects of digital technologies on aggregate productivity since the mid-2000s. In light of these findings, I take a pessimistic view on the future of productivity growth.

Keywords: Digitalization; Investment-Specific Technical Change; Production Networks; Productivity (search for similar items in EconPapers)
JEL-codes: D57 L23 L86 O30 O33 O47 (search for similar items in EconPapers)
Date: 2024-12-13
Note: as3372
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.janeway.econ.cam.ac.uk/working-paper-pdfs/jiwp2431.pdf

Related works:
Working Paper: Digitalization and Productivity Growth Slowdown in Production Networks (2024) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camjip:2431

Access Statistics for this paper

More papers in Janeway Institute Working Papers from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().

 
Page updated 2025-03-22
Handle: RePEc:cam:camjip:2431