DP3142 The Solow Productivity Paradox in Historical Perspective

Author(s): Nicholas Crafts
Publication Date: January 2002
Keyword(s): general purpose technologies, growth accounting, productivity paradox
JEL(s): O47
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=3142

A growth accounting methodology is used to compare the contributions to growth in terms of capital-deepening and total factor productivity growth of three general-purpose technologies, namely, steam in Britain during 1780-1860, electricity and information and communications technology in the United States during 1899-1929 and 1974-2000, respectively. The format permits explicit comparison of earlier episodes with the results for ICT obtained by Oliner and Sichel. The results suggest that the contribution of ICT was already relatively large before 1995 and it is suggested that the true productivity paradox is why economists expected more sooner from ICT.