The Intensity and Externality Effects of Information Technology Investments on National Productivity Growth

This study investigates the relation between information technology (IT) expenditures and national productivity based on a production estimation approach by using a pooled time-series country-level data set for the period from 1992 to 2000. The results, which confirm the findings of earlier studies on country-level IT investment effect, show IT has significant and positive effects on national productivity growth. We find that IT intensity improves the positive effect of IT investment on national productivity growth and that the existence of IT externalities, through which spillovers of knowledge and innovation occur, may eventually lead to long-run persistent national productivity growth.