ICT and Productivity Growth in Transition Economies: Two-Phase Convergence and Structural Reforms

Marcin Piątkowski and Bart van Ark ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the role of information and communication technology (ICT) as a driver of improved productivity performance of Central and Eastern European (CEE) countries and Russia (CEER) relative to the EU-15 and the U.S. during the 1990s. The paper investigates how, and to what extent, ICT contributed to a narrowing in the productivity gap. Although investment in ICT capital has strongly increased, total factor productivity (TFP) growth has made the largest contribution to convergence during the 1990s. In a few CEER countries, notably the Czech Republic and Hungary, ICT production contributed more to productivity growth than the EU-15 average. Spillovers from a productive use of ICT in both CEER countries and the EU-15 are still considerably lower than in the U.S.. The paper argues that the convergence process between CEER countries and the EU-15 is characterized by two phases. In the first “restructuring” phase, convergence has been driven by enterprise restructuring in manufacturing, which was facilitated by rapid ICT investment in new plants, and by growth in ICT production in particular through FDI. In the second “expansionary” phase the sustained convergence has to rely more on productivity growth in sectors that make intensive use of ICT, in particular the service sector. While the first phase is dependent largely on openness and basic fundamental reforms, the second phase requires deeper structural reforms focused on product and labor market flexibility, business re-organization and investment in human capital and ICT skills.

Keywords: productivity; economic growth; convergence; ICT; Eastern Europe (search for similar items in EconPapers)
JEL-codes: O1 O33 O47 (search for similar items in EconPapers)
Date: 2005-01-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published in TIGER Working Paper Series 72 (2005): pp. 1-32

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/29398/1/MPRA_paper_29398.pdf original version (application/pdf)

Related works:
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:pra:mprapa:29398

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().