Structural Sources of a Productivity Decline in the Digital Economy
International Journal of Managing Information Technology (IJMIT)
ISSN: 0975-5586 (Online); 0975-5926 (Print)
Article:
Structural Sources of a Productivity Decline in the Digital Economy
Authors
Chihiro Watanabe1,2, Kuniko Moriya3, Yuji Tou4 and Pekka Neittaanmaki5,
1,5University of Jyvaskyla, Finland,
2 International Institute for Applied Systems Analysis (IIASA), Austria,
3Bank of Japan, Japan and4Tokyo Institute of Technology, Japan
1,5University of Jyvaskyla, Finland,
2 International Institute for Applied Systems Analysis (IIASA), Austria,
3Bank of Japan, Japan and4Tokyo Institute of Technology, Japan
Abstract
While the Internet-driven digitized innovation has provided us with extraordinary services and welfare,
productivity in industrialized countries has been confronted with an apparent decline, and it has raised the
question of a productivity paradox. The limitations of the GDP statistics in measuring the digital economy
have become an important subject.
Based on national accounting framework and utilizing the development trajectories of 500 global
information and communication technology (ICT) firms,structural sources of such decline were investigated.
It was identified the two-faced nature of ICT that resulting in R&D-intensive firms falling into a vicious cycle
between R&D increase and marginal productivity of ICT decline.
Confronting such circumstances, R&D-intensive firms have been endeavoring to transform into disruptive
business model by harnessing the vigor of soft innovation resources. This transformation leads to
spontaneous creation of uncaptured GDP and provides insightful suggestion to overcome the limitation of the
GDP statistics in the digital economy.
Keywords
Digital economy, productivity decline, limitation of GDP, two-faced nature of ICT, bipolarization
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