An analysis of ICT hardware manufacturing in industrialized economies: Growth patterns, productivity performance, and driving Forces

Abstract

We employ growth accounting and data from the 2019 release of the EUKLEMS database to systematically quantify the primary contributors to value-added and labor productivity growth within the Information and Communication Technology Manufacturing (ICTM) industry across 13 industrialized economies between 2000 and 2015. Our analysis reveals that total factor productivity, labor quality, investments in software, and research and development emerge as the primary drivers of growth. Additionally, when compared to the overall manufacturing sector, the ICTM industry has undergone more extensive restructuring in most economies under examination. Moreover, the study highlights a substantial and widespread adverse impact of the 2008–2009 global financial crisis (GFC) and its aftermath on the ICTM industry. In addition, the United States stands out as a leading player in ICTM’s productivity performance, resulting in a considerable gap between the EU and the US in this regard, and the US exhibiting stronger resilience in ICTM labor productivity growth during the crisis-affected period, with total factor productivity playing an essential role. Drawing from its findings, the study offers several policy insights to advance the ICT manufacturing industry in industrialized economies. They encompass strategies to strengthen industry growth drivers and support for ongoing restructuring efforts in response to challenges arising from rapid technological change as well as more intense global competition.