Electrifying and Digitalizing the Finnish Manufacturing Industry: Historical Notes of Diffusion and Productivity

Jukka Jalava ()

No 870, Discussion Papers from The Research Institute of the Finnish Economy

Abstract: The diffusion of two general purpose technologies, electricity and ICT, in the Finnish manufacturing industry is observed. The full diffusion of electricity as motive power in the 1920s and 1930s led to a step-up of nearly 4 percentage points in manufacturing LP. Furthermore, all industries across the board gained in productivity. In contrast, when ICT was fully diffused by the end of the 20th century yeast-like productivity gains were invisible. In fact, LP slowed down in many industries, the notable exception of which is the electric and electronic appliance industry that experienced a mushroom-like boost in its LP growth. When the labour productivity growth was decomposed into the contributions of internal productivity growth, the employment share effect and the cross term, we found that labour shifting to industries with differing levels or growth rates of LP explains less of aggregate LP change in 19201938 (and even less in 19742000) than it did in 19011920.

Pages: 16 pages
Date: 2003
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