TY - JOUR AU - Basu,Susanto AU - Fernald,John G. AU - Oulton,Nicholas AU - Srinivasan,Sylaja TI - The Case of the Missing Productivity Growth: Or, Does Information Technology Explain why Productivity Accelerated in the US but not the UK? JF - National Bureau of Economic Research Working Paper Series VL - No. 10010 PY - 2003 Y2 - October 2003 UR - http://www.nber.org/papers/w10010 L1 - http://www.nber.org/papers/w10010.pdf N1 - Author contact info: Susanto Basu Department of Economics Boston College 140 Commonwealth Avenue Chestnut Hill, MA 02467 Tel: 617/552-2182 Fax: 617/552-2308 E-Mail: susanto.basu@bc.edu John Fernald Research Department, Mail Stop 1130 Federal Reserve Bank of San Francisco 101 Market St San Francisco, CA 94105 Tel: 415-974-2135 Fax: 815-642-0515 E-Mail: john.fernald@sf.frb.org Nicholas Oulton Sylaja Srinivasan Bank of England Threadneedle Street London EC2R 8AH ENGLAND E-Mail: Sally.Srinivasan@bankofengland.co.uk AB - We argue that unmeasured investments in intangible organizational capital associated with the role of information and communications technology (ICT) as a general purpose technology' can explain the divergent U.S. and U.K. TFP performance after 1995. GPT stories suggest that measured TFP should rise in ICT-using sectors, perhaps with long lags. Contemporaneously, investments in ICT may in fact be associated with lower TFP as resources are diverted to reorganization and learning. In both the U.S. and U.K., we find a strong correlation between ICT use and industry TFP growth. The U.S. results, in particular, are consistent with GPT stories: the TFP acceleration was located primarily in ICT-using industries and is positively correlated with industry ICT capital growth from the 1980s and early 1990s. Indeed, as GPT stories suggest, controlling for past ICT growth, industry TFP growth appears negatively correlated with increases in ICT capital services in the late 1990s. A somewhat different picture emerges for the U.K. TFP growth does not appear correlated with lagged ICT capital growth. But TFP growth in the late 1990s is strongly and positively associated with the growth of ICT capital services, while being strongly and negatively associated with the growth of ICT investment. ER -