Don t blame IT! International Dimensions of the Productivity Paradox The productivity paradox of information technology questions the contributions of IT to economic output and productivity, based on the fact that there has been a marked slowdown in pro- Sanjeev Dewan and Kenneth L. Kraemer ductivity growth despite massive and growing investments in IT. Figure 1 (top half) illustrates the paradox for the U.S., graphing the annual growth of labor productivity and new IT investment per worker over the period 1965 1994.1 It is apparent that annual growth rate in labor productivity has slowed from over 3% in the 1960s to roughly 1% in the 1990s. By comparison, IT investments have been growing at much higher rates for most of this time period. These and other similar trends in the U.S. economy are concisely expressed by Robert Solow s nowfamous quip that the computer age is everywhere but in the productivity statistics. In fact, Solow s observation applies equally well to other advanced economies as it does to the U.S. A slowdown in productivity growth has been the plight of other developed countries as well. The bot1Labor productivity is measured by the Bureau of Labor Statistics in
Communications of the ACM – acm
Published: Aug 1, 1998
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