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US/Europe productivity growth

Varian on use of IT in the US and Europe and the implications for productivity growth…

American Companies Show an Edge in Putting Information to Work – New York Times
[…]
Furthermore, the authors suggest that information technology capital may be a big part of the productivity difference: American companies in Britain use a whopping 40 percent more information technology capital per worker than the average company. Not only did American companies use more information technology, they used it more effectively. According to the economists, “U.S. firms appeared to simply get more productivity out of the same amount of I.T. (this was not true of non-I.T. capital).”
There is an additional piece of evidence: the big returns to information technology use by American companies operating in Britain were in wholesale and retail trade – the same industries that have been so productive in the United States.
[…]

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Filed under: Economics

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