Information Technology Information Technology and and
Economic Growth Economic Growth in the U.S. and Japanin the U.S. and Japan
By
Dale W. Jorgenson (Harvard University)
Koji Nomura (Keio University)
Economic and Social Research Institute, International Collaboration Projects Meeting,
February 15-16, 2005, Tokyo, Japan
Economic Growth Economic Growth in the Information Agein the Information Age
The Information Age:Faster, Better, Cheaper!
Role of Information Technology: IT Prices and the Cost of Capital
IT and Economic Growth in the U.S. and Japan: IT Investment and Productivity Growth
Economics on Internet Time:The New Research Agenda
The Information Age:The Information Age:Faster, Better, Cheaper!Faster, Better, Cheaper!
Moore’s Law: The number of transistors on a chip doubles every 18-24 months(Pentium 4, released November 20,2000, has 42 million transistors).
Moore (1998): "If the automobile industry advanced as rapidly as the semiconductor industry, a Rolls Royce would get half a million miles per gallon, and it would be cheaper to throw it away than to park it."
Invention of the Transistor:
Development of Semiconductor Technology.The Integrated Circuit:
Memory Chips; Logic Chips.
Source: No Exponential is Forever, Gordon Moore ftp://download.intel.com/research/silicon/Gordon_Moore_ISSCC_021003.pdf)
Holding Quality ConstantHolding Quality ConstantMatched Models and HedonicsMatched Models and Hedonics
Software: Prepackaged, Custom, and Own-Account.
Semiconductor Price Indexes:Memory and Logic Chips.
Computer Price Indexes:The BEA-IBM Collaboration.
Communications Equipment:Terminal, Switching, and Transmission.
Relative Prices of Computers and Semiconductors, 1977-2000
0.01
0.1
1
10
100
1000
1977 1980 1983 1986 1989 1992 1995 1998
Computers Memory Logic
Log
Scal
e (1
996=
1.0)
All price indexes are divided by the output price index.
95 97 99 02 05 08 11
1994 NTRS
1997 NTRS
1998 / 1999 ITRS
Min
imum
Fea
ture
Siz
e (n
m)
(DR
AM
Hal
fPi
tch)
500
350
250
180
130
100
70
50
35
2595 97 99 02 05 08 11
92
92
1992 NTRS
International SEMATECH
Area for Future ITRS Acceleration
Semiconductor Roadmap Acceleration
95 97 99 02 05 08 11
1994 NTRS
1997 NTRS
1998 / 1999 ITRS
(DR
AM
Hal
fPi
tch)
500
350
250
180
130
100
70
50
35
2595 97 99 02 05 08 11
92
92
1992 NTRS
International SEMATECH
Area for Future Acceleration
2001/2003 ITRS*
*Note the 2003 ITRS timing is unchanged from the 2001 ITRS
Relative Prices of Computers, Communication Equipment, and Software, 1977-2000
0.1
1
10
100
1977 1980 1983 1986 1989 1992 1995 1998
ComputersCentral Office Switching EquipmentPrepackaged Software
Log
Scal
e (1
996=
1.0)
All price indexes are divided by the output price index.
Role of Information Technology:Role of Information Technology:IT Prices, Investment, and ProductivityIT Prices, Investment, and Productivity
Capital Contribution by Type:
Computers, Communications Equipment, and Software.
Input Shares of IT:
Computers, Communications Equipment, and Software.
Capital Contribution:
IT versus Non-IT Capital Services.
IT Capital Stock in Japan
0.0
0.2
0.4
0.6
0.8
1.0
1960 1965 1970 1975 1980 1985 1990 1995 2000Computers Communication EquipmentCustom Software Packaged SoftwareOwn Account Software
Real composition of total IT capital stock (1995 price).
Shar
e (%
)
Capital Input Contribution of Information Technology in the U.S.
0.0
0.5
1.0
1.5
2.0
2.5
1977-1990 1990-1995 1995-2000
Non-IT Capital IT Capital
Average annual percentage growth rates, weighted by income shares.
Ann
ual C
ontri
butio
n (%
)
Capital Input Contribution of Information Technology in Japan
0.00.51.01.52.02.53.03.54.04.5
1960-1977 1977-1990 1990-1995 1995-2000
Non-IT Capital IT Capital
Average annual percentage growth rates, weighted by income shares.
Ann
ual C
ontri
butio
n (%
)
IT Capital Input Contribution in Japan
0.0
0.1
0.2
0.3
0.4
1960-1977 1977-1990 1990-1995 1995-2000Computers Communication EquipmentCustom Software Packaged SoftwareOwn Account Software
Average annual percentage growth rates, weighted by income shares.
Ann
ual C
ontri
butio
n (%
)
Industry Capital Input Contributionsin the U.S., 1977-1995
-0.1 0.0 0.1 0.2 0.3 0.4
Coal MiningNon energy Mining
Education, privateAgriculture
Petroleum RefiningPrimary Metal
Lumber, Wood, FurnitureRubber and Plastic
Textiles, Apparel, LeatherStone, Clay, Glass
PaperMotor Vehicles
Computers and Office EquipmentConstruction
Fabricated MetalOther Electrical Mach
Communications EquipmentOther Transportation Equipment
GasFood and Tobacco
Government EducationElectronic Components
LegalOil and Gas Mining
ChemicalsTransportation
Instruments and Miscellaneous Manuf.Other ServicesHealth private
Printing and PublishingGovernment Enterprises
ElectricityMachinery excl. Computers
Real Estate (rental)Insurance
Retail and EatingComputer Services
Government excl. EducationProfessional and Social Svcs
CommunicationsBusiness Svc excl. Computer
Wholesale TradeFinance
Household
Non-IT CapitalIT Capital
Note: Industries sorted by IT Capital contribution
Industry Capital Input Contributionsin the U.S., 1995-2000
-0.1 0.0 0.1 0.2 0.3 0.4 0.5
Petroleum RefiningCoal Mining
Non energy MiningEducation, private
Other Electrical MachPrimary Metal
AgricultureTextiles, Apparel, Leather
PaperLumber, Wood, Furniture
Stone, Clay, GlassMotor Vehicles
Oil and Gas MiningGas
Rubber and PlasticComputers and Office
ElectricityFabricated Metal
Other Transportation EquipmentFood and Tobacco
Government EducationElectronic Components
Communications EquipmentConstruction
ChemicalsInstruments and Miscellaneous
Health privateLegal
Other ServicesGovernment Enterprises
Machinery excl. ComputersPrinting and Publishing
TransportationInsurance
Retail and EatingReal Estate (rental)Computer Services
Government excl. EducationCommunications
Professional and Social SvcsBusiness Svc excl. Computer
Wholesale TradeFinance
Household
Non-IT CapitalIT Capital
Note: Industries sorted by IT Capital contribution
Industry Capital Input Contributionsin Japan, 1960-1977
-0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
Leather Products Coal Products
Woods and Related Products Water Supply
Furniture and Fixture Storage Facility Service
Coal Mining Rubber Products
Other Mining Textile
Apparel Air Transportation
Precision InstrumentsRailroad Transportation
Real EstateGas Supply
Stone, Clay, GlassPetroleum Refining
Road TransportationOther Manufacturing
ResearchNon-ferrous Metal
Printing and PublishingMetal Products
HouseholdComputersEducation
FoodsCommunications Equipment
Paper and Pulp Agriculture, Forestry, Fishery
Water TransportationMachinery excl Computers
Medical CareMotor Vehicles
Construction Other Transportation Equipment
Chemical ProductsElectricity
Electronic ComponentsIron and Steel
Public AdministrationWholesale and Retail
Other Electrical MachFinance and Insurance
CommunicationsOther Service
Non-IT CapitalIT Capital
Note: Industries sorted by IT Capital contribution
Industry Capital Input Contributionsin Japan, 1977-1995
-0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6
Water TransportationCoal Mining
Other Mining Leather Products
Woods and Related Products Furniture and Fixture
Coal Products Water Supply
Rubber Products Apparel
Other Transportation EquipmentPaper and Pulp
Air TransportationTextile
Storage Facility Service Stone, Clay, Glass
Non-ferrous Metal Petroleum Refining
Gas SupplyAgriculture, Forestry, Fishery
Real EstateResearch
Iron and SteelMetal Products
Communications EquipmentPrecision InstrumentsOther Manufacturing
FoodsEducation
Railroad TransportationMotor Vehicles
Road TransportationPrinting and Publishing
Machinery excl ComputersMedical Care
Chemical ProductsComputers
Construction Electricity
Other Electrical MachElectronic Components
HouseholdWholesale and RetailPublic Administration
CommunicationsFinance and Insurance
Other Service
Non-IT CapitalIT Capital
Note: Industries sorted by IT Capital contribution
Industry Capital Input Contributionsin Japan, 1995-2000
-0.1 0.0 0.1 0.2 0.3
Textile Furniture and Fixture
Coal Mining Leather Products
Woods and Related Products Other Mining
Metal ProductsCoal Products
Storage Facility Service Apparel
Agriculture, Forestry, Fishery Air Transportation
Other Transportation EquipmentRubber Products
Paper and Pulp Non-ferrous Metal
Iron and SteelWater Supply
Stone, Clay, GlassGas Supply
ResearchEducation
Water TransportationPrecision Instruments
Petroleum RefiningMachinery excl Computers
ComputersMotor Vehicles
Road TransportationReal Estate
Other ManufacturingCommunications Equipment
FoodsPrinting and Publishing
ElectricityRailroad Transportation
Chemical ProductsMedical Care
Other Electrical MachConstruction
Electronic ComponentsWholesale and RetailPublic Administration
CommunicationsHousehold
Finance and InsuranceOther Service
Non-IT CapitalIT Capital
Note: Industries sorted by IT Capital contribution
0.00
0.50
1.00
1.50
2.00
2.50
3.0019
80-1
990
1990
-199
5
1995
-200
0
1981
-199
0
1990
-199
5
1995
-200
0
1980
-199
0
1990
-199
5
1995
-200
0
1980
-199
0
1990
-199
5
1995
-200
0
1980
-199
0
1990
-199
5
1995
-200
0
1980
-199
0
1990
-199
5
1995
-200
0
1980
-199
0
1990
-199
5
1995
-200
0
US Canada UK France Germany Italy Japan
Ann
ual C
ontr
ibut
ion
(%)
Non-IT IT
Capital Input Contribution of Information Technology by Country