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Where data for 2011 was unavailable the next closest year was used 0. 16 %0. 16 %0. 17
Comparing 2011 data from Figure 12 and 13 shows the occupations spending most of their time on R&d (as determined
In this section data gathered on the number of R&d-active companies and the levels of R&d
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PAGE 1 Raising European Productivity Growth Through ICT BY BEN MILLER AND ROBERT D. ATKINSON JUNE 2014
THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Most commentary on Europe†s economy focuses on its precarious
PAGE 2 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Around two-thirds of U s. total factor productivity growth between 1995 and 2004 was
of doing business for a wide range of data providers, and restrictions on cloud provider
PAGE 3 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 ICT investments. In the latter case, regulation has provided the significant bottleneck to
Information technology Agreement Fifth, European firms would be better able to take advantage of ICT if they could achieve
PAGE 4 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 quickly, but many other types of small firms are simply inefficient organizations that have
PAGE 5 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 The diverging productivity trends also reflect important industry-level differences.
PAGE 6 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Four countries†Finland, Greece, Sweden, and the United Kingdom†continued closing
PAGE 7 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Figure 4: EU-15 productivity percent growth rate relative to U s. area of circle is relative size of
PAGE 8 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 $16. 7 trillion. 20 Or from a different perspective,
software. The lion†s share of productivity growth for almost all nations, especially larger ones, however, comes
PAGE 9 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 On the level of individual industries, productivity gains can occur in three
equipment, and software. Indeed, new growth economics accounting suggests that the lion†s share of productivity stems from the use of more and better â€oetools. †30
PAGE 10 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 And in today†s knowledge-based economy, the tools that are most ubiquitous and most
Internet, although that itself drives growth. 31 They include hardware, software applications and telecommunications networks, and increasingly tools that incorporate all three
components in them, such as computer-aided manufacturing systems and self-service kiosks These tools and can be used in the internal operations of organizations (business
government and nonprofit; transactions between organizations; and transactions between individuals, acting both as consumers and citizens, and organizations.
PAGE 11 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 â€oefirms with high levels of ICT are more likely to grow (in terms of employment) and less
capital, only computers, communications equipment, and software are associated positively with multi-factor productivity. 44 Hitt and Tambe find that the spillovers from IT nearly
double the impact of IT investments. 45 Rincon, Vecchi, and Venturini confirm the GPT nature of ICTS through an exhaustive industry-level study of both productivity benefits
users to a network. Simply put, increasing the user size of a network makes all current users
better off. When these three factors are combined, ICT can have a big impact While it†s unclear as to the future of ICT development and its impact on productivity, it
including cloud computing â€oeinternet of Things, †data analytics and big data, IT-powered robotics, intelligent agents
mobile commerce, improved self-serve kiosks, 3d printing, location awareness, and machine learning THE IMPACT OF ICT ON EUROPEAN PRODUCTIVITY
A principal reason the EU has had lower productivity growth than the United states since the emergence of the Internet age is that it has had lower productivity gains from ICT
OECD data show that from 1985 to 2010, ICT capital contributed 0. 53 percentage points to the average annual GDP growth rate in the United states and 0. 56 percentage points in
the United kingdom, but only 0. 32 percentage points in France, 0. 28 in Italy, and 0. 27 in
If productivity growth is to accelerate in the future, it will almost certainly be due to ICT
PAGE 12 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Germany. (Figure 6) Similarly, a 2011 report from Coe-Rexecode finds that while ICT
PAGE 13 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Figure 7: Components of labor productivity growth (average percentage points per annum), 1995
On a firm level, the benefits of Internet and computer use for productivity are also well
increased revenues 8. 6 percent and decreased costs 2. 6 percent through the use of Internet
Internet boom as well. In a study of 1, 955 European firms, Nurmilaakso finds that Internet access and standardized data exchange with trading partners contributed to
significant increases in labor productivity. 60 Similarly, Koellinger finds that firms in the EU that implemented eight e-business practices were more than twice as likely to report that
PAGE 14 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 of national growth. 63 Also in Italian firms, Hall, Lotti,
found that access to broadband Internet is associated with increases in productivity of 3. 6 percent for manufacturing and services firms and 62 percent for ICT firms. 69 Belgian firms
PAGE 15 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 WHY HAS GAINED EUROPE NOT AS MUCH FROM ICT
PAGE 16 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Amount of ICT Investment Firms in Europe do not invest as much in ICT as firms in the United states. Higher levels
PAGE 17 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Figure 9: Gross fixed capital formation (investments) by type as a percentage of GDP (EUR-W is
PAGE 18 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Figure 11: ICT assets as percentage gross fixed capital formation, 201196
ICT investment shows up in survey data on ICT use as well. The 2013 and 2014 World
trail behind the United states in ICT adoption, business-to-business Internet use, business -to-consumer Internet use,
and staff ICT training. 97 (See Figure 12 Figure 12: Average of 4 indicators of ICT use (1-7, where is 7 highest use;
PAGE 19 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 EU private service sector productivity grew only one-third as fast as in the United states
sectors of the economy (especially the ICT intensive users), in the EU-15 its positive effects
reducing the revenue for websites that rely on ad-based business models. 106 This appears to be one reason the EU lags behind the
United states in Internet companies. Campbell et al. examine the impact of privacy regulations in specific markets, finding that regulation may keep out new firms, some of
PAGE 20 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Privacy regulations not only limit business models, they also increase the cost of doing
which requires search engines to delete certain links based on individual requests, is likely to raise compliance costs significantly.
the effectiveness of IT investment include the new law requiring websites to obtain â€oeexplicit consent†before placing web cookies,
and the requirement that companies provide external human involvement as needed in any automatic, IT-enabled process that produces
particularly to smaller websites, while the latter is likely to delay progress in the emerging area of big data analytics
Regulations don†t just increase costs†poorly-designed or unresponsive regulations can prevent or delay the adoption of new technologies, such as 4G LTE mobile broadband
networks. The European union has been hampered by regulatory mandates that specified the technologies that carriers could use in their allotted spectrum,
and LTE was not initially allowed by these mandates; a similar problem occurred with the European 3g
rollout. Moreover, the United states was the first nation to take advantage of the â€oedigital dividend†from the DIGITAL TV transition.
In contrast, the process of allocating new spectrum for LTE and modifying regulations to permit LTE use on previous allocations is
still underway in Europe. As a result, consumers and businesses in Europe can rely on a
less robust mobile communications infrastructure Labor market regulations have a large negative impact on ICT investment and the benefits
firms in terms of outsourcing and offshoring core business functions. 115 Again, such rules reduce the return on investment from ICT purchases,
PAGE 21 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Land use regulation is a third area of regulation that leads to reduced ICT benefits
Because the EU signed onto the 1997 Information technology Agreement (ITA), an international agreement to reduce ICT barriers,
PAGE 22 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 overall. (Figure 14) These taxes have a clear impact on prices:
found that for Apple†s ipad, on average 14 percent of the purchase price went to taxes, but
proposed data mining and data collection taxes, directed specifically at large internet companies such as Google and Facebook. 125 Higher taxes on ICT-producing companies
may raise the price of ICT goods and services for everyone else. Moreover, the existing
data collection would tax companies based on the number of users they collect data on apparently with no regard to the actual market value of the data
Another important channel through which tax policies influence investment is depreciation rates†the rates at which corporations can write off capital investments for tax purposes. 126
PAGE 23 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 system for a mid-size firm as a large one,
marginal costs but higher fixed costs. 130 To be sure, the increased provision of software through cloud-based services may change that somewhat,
PAGE 24 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Europe†s second challenge regarding scale is the issue of market size.
â€oefirms do not simply plug in computers or telecommunications equipment and achieve service quality or efficiency
gains. Instead they go through a process of organizational redesign and make substantial changes to their service or output mix. †139 Polling of business executives around the world
reorganize itself around its core competencies. 141 These organizational effects of ICT end up facilitating more significant productivity gains than firms would achieve simply by
PAGE 25 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 developing new analytical capabilities, whereas in Europe the primary concern is
countries have focused recently on building their own domestic data centers, rather than ensuring that European ICT users have access to the cheapest and highest quality cloud
data providers This focus on the ICT-producing sector appears to be misplaced. Rohman finds that the
beneficial effects of the ICT sector for the broader European economy declined after the year 2000.149 Other recent evidence has shown that most of the productivity gains from
With the great success of some of the world ICT leaders, such as Apple, Google, Intel, and
it still leads to efforts to get a cloud data center in rural France, instead of helping French
PAGE 26 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 companies embrace the cloud and engage in disruptive productivity growth.
PAGE 27 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Focus on Raising Productivity Many European officials see increasing jobs,
by the WTO€ s Information technology Agreement that was supposed to eliminate tariffs ON IT products. In particular, the European Taxation and Customs union wanted to
14 percent on digital cameras, multi-function printers, set-top boxes, and liquid crystal display (LCD) computer monitors. 159 The intent was to boost the production of these
high-value products in Europe, but the impact would have also been to limit ICT
that some products were now consumer goods rather than information technology goods. 160 In cases like this, the key question facing European policymakers is
PAGE 28 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 whether promotion of the former through higher tariffs or other restrictions (like on cross
-border data flows) will be detrimental to the latter Yet, even if raising tariffs might lead to some offsetting production of the good or service in
Any government policy that makes computers more expensive will discourage use and reduce the possible benefits of IT.
technology industry areas such as high-speed broadband telecommunications, smart cards radio frequency identification devices (RFID), geographic information systems, mobile commerce, and the Internet of things.
In these cases, EU governments should use a wide PAGE 29 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014
array of policy levers, including tax, regulatory, and procurement policies, to spur greater ICT innovation and transformation
Moreover, government officials at all levels can and should lead by example by leveraging their own ICT efforts to achieve more effective and productive public sector management
including broadband telecommunications, Internet usage, and data. They should allow companies to more rapidly depreciate ICT investments
for tax purposes, including allowing firms to expense them in the first year Some economists might question such policies,
ensure low prices for European ICT users. The ITA has played a critical role in the spread
PAGE 30 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 particular, many professional services have national
PAGE 31 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 due to emerging â€oedata nationalism††the idea that data must be stored domestically in
order to keep it secure. Data nationalism is a â€oefalse promise†because it is unlikely to deliver
the expected benefits of privacy and security, and it also holds significant potential to slow
down ICT-related growth. 182 Unfortunately, data nationalist policies are already a reality in some countries:
both the Norwegian and Danish Data protection Authorities have issued rulings to prevent the use of cloud computing services by municipalities
when servers are not located domestically (although the Norwegian decision was rescinded). 183 There has been talk as well by European leaders of building a â€oeeuropean network†for
communication so that data never physically crosses the Atlantic. 184 By definition, the result of these kinds of policies will be to raise the costs of ICT services for firms in these
nations, reducing their ICT adoption and productivity. European firms should have free access to the best in breed and best value IT goods and services,
The responsible use of data can lead to productivity gains and innovation. However, overly stringent privacy rules limit the ability
available revenue for websites and can cripple the growth of useful services Another example is the â€oeright to be forgotten†rule implemented by the European
search engines be removed. 187 Such a rule might sound good in theory, but in practice it could prove quite difficult for compliance and enforcement.
PAGE 32 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 States has taken already and proven successful,
1. The Conference Board, Total Economy Database: January 2014 (total GDP EKS, labor productivity per hour worked EKS;
-board. org/data/economydatabase/;/author calculations following Marcel P. Timmer et al. â€oeproductivity and Economic growth in Europe:
2. The Conference Board, Total Economy Database 3. Ibid 4. Ibid 5. Ibid 6. Mary O†Mahony and Bart van Ark, eds.
The Conference Board, Total Economy Database: January 2014 (Table 5 accessed April 2, 2014), http://www. conference-board. org/data/economydatabase
/10. Ibid 11. Ibid 12. Ibid. Note that EU-28 productivity actually decreases due to the less-productive EU-13 increasing their
Data unavailable for Croatia, Estonia, Latvia, and Slovenia 16. Ibid 17. Ibid. Data unavailable for Croatia, Estonia, Latvia and Slovenia;
Romania excluded because its extremely low initial productivity makes it an outlier 18. Robert D. Atkinson, â€oecompetitiveness, Innovation and Productivity:
Information technology and Innovation Foundation, August 2013 http://www. itif. org/publications/competitiveness-innovation-and-productivity-clearing-confusion
The Conference Board, Total Economy Database: January 2014 (total GDP EKS, labor productivity per hour worked EKS;
-board. org/data/economydatabase/;/Timmer et al. â€oeproductivity and Economic growth in Europe. †Assuming 2. 8 percent productivity growth
The Conference Board, Total Economy Database. Assuming 1. 6 percent productivity growth 21. Ibid. Assuming yearly productivity growth for EU-15 after 1995 was the actual rate for the United states
Innovation Policy†(Information technology and Innovation Foundation, October 7, 2010), 27-30 http://www. itif. org/publications/good-bad-and-ugly-innovation-policy;
PAGE 33 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 27. Chad Syverson, â€oewhat Determines Productivity?
Guidelines for Collecting and Interpreting Innovation Data (OECD 2005 29. Robert D. Atkinson, â€oecompetitiveness Innovation and Productivity:
Information technology and Innovation Foundation, August 2013), http://www2. itif. org/2013 -competitiveness-innovation-productivity-clearing-up-confusion. pdf
30. Paul M. Romer, â€oeendogenous Technological Change, †Journal of Political economy 98, no. 5 (1990
and Daniel Castro, The Internet Economy 25 Years After. com (Information technology and Innovation Foundation, March 2010
http://www. itif. org/publications/internet-economy-25-years-after-com; Matthieu PÃ lissiã du Rausas et
al.,, â€oeinternet Matters: The Net†s Sweeping Impact on Growth, Jobs, and Prosperity†(Mckinsey Global
http://www. itif. org/files/2008-07-15-lipsey. pdf 35. See Kenneth I. Carlaw, Richard G. Lipsey,
http://www. sfu. ca/econ-research/Repec/sfu/sfudps/dp07-18. pdf 36. Jason Dedrick, Vijay Gurbaxani,
A Critical review of the Empirical Evidence, †ACM Computing Surveys 35, no. 1 march 2003): 1
A Survey of the Literature, †OECD Digital economy Papers, no 195 (2012), http://dx. doi. org/10.1787/5k9bh3jllgs7-en;
https://www1. oecd. org/std/productivity-stats/44516351. pdf#page=437; Sophia P. Dimelis and Sotiris K
Productivity in Developed and Developing Countries, †Journal of Management Information systems 30 no. 1 july 1, 2013:
-tr. org. tr/eu/DCR/cstudytheeconomicimpactofictlondonschoolofeconomics. pdf 40. For example, the OECD report The Economic Impact of ICT found that ICT (production
-PAGE 34 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 ilibrary. org/docserver/download/9204051e. pdf?
expires=1398953382&id=id&accname=ocid43017007& checksum=04b30d1bfc36e957bcfd995ccb443898. See also: Robert D. Atkinson and Andrew Mckay, â€oedigital Prosperity:
Understanding the Economic Benefits of the Information technology Revolution†(Information technology and Innovation Foundation, March 2007 http://archive. itif. org/index. php?
id=34 41. Dale W. Jorgenson, Mun S. Ho, and Jon D. Samuels, â€oea Prototype Industry-Level Production Account
for the United states, 1947-2010†(presentation to the Final World Input-Output Database Conference Groningen, The netherlands, April 2013), 24
http://www. worldklems. net/data/notes/jorgenson ho samuels. USPRODUCTIONACCOUNT. pdf 42. Ibid. 30; David M. Byrne, Stephen D. Oliner,
and Daniel E. Sichel, â€oeis the Information technology Revolution Over? †(SSRN Scholarly Paper, March 27, 2013), 22
http://papers. ssrn. com/abstract=2240961; Chad Syverson, â€oewill History Repeat Itself? Comments on †Is
the Information technology Revolution Over? ††International Productivity Monitor 25 (2013: 37†40 43. S. Gilchrist, V. Gurbaxani,
and R. Town, â€oeproductivity and the PC Revolution†(working paper, Center for Research on Information technology and Organizations, 2001;
Robert K. Plice and Kenneth L Kraemer, â€oemeasuring Payoffs from Information-technology Investments: New Evidence from Sector
-Level Data on Developed and Developing Countries†(working paper, Center for Research on Information technology and Organizations, 2001;
Mika Maliranta and Petri Rouvinen, â€oeproductivity effects of ICT in Finnish business†(discussion paper no. 852, Research Institute of the Finnish
Economy, 2003 44. Daniel J. Wilson, â€oeit and Beyond: The Contribution of Heterogeneous Capital to Productivityâ€
working paper no. 13, Federal reserve bank of San francisco, 2004), 13 45. Lorin M. Hitt and Prasanna Tambe, â€oemeasuring Spillovers from Information technology Investmentsâ€
proceedings of the 27th International Conference on Information systems, Milwaukee, WI, 2006 1793 46. Ana Rincon, Michela Vecchi,
and Francesco Venturini, â€oeict Spillovers, Absorptive Capacity and Productivity Performance†(discussion paper, National Institute of Economic and Social Research
Journal of Information systems in Developing Countries 41 (2010 http://www. ejisdc. org/Ojs2/index. php/ejisdc/article/view/665 and Jyoti Vig, â€oeinformation Technology
and the Indian Economy†(Phd diss. University of Minnesota, March 2011 http://conservancy. umn. edu/bitstream/104630/1/Vig umn 0130e 11796. pdf
For public sector literature examples, see: Luis Garicano and Paul Heaton, â€oeinformation Technology Organization, and Productivity in the Public sector:
http://www. persee. fr/web/revues/home/prescript/article/tiers 0040-7356 1988 num 29 115 3718 49. OECD Statextracts, Country Statistical Profile 2012 (Contributions to GDP growth:
-63432/ICTNET%20issues%20papers%201-4. pdf 52. Ibid PAGE 35 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014
53. Van Welsum et al. Unlocking the ICT Growth Potential in Europe 54. Dan Corry, Anna Valero,
-html 55. Peter Goodridge, Jonathan Haskel, and Gavin Wallis, â€oeuk Innovation Index: Productivity and Growth
http://ideas. repec. org/p/cpr/ceprdp/9063. html 56. Mika Maliranta, Petri Rouvinen, and Pekka Ylã¤-Anttila, â€oefinland†s Path to Global Productivity Frontiers
through Creative Destruction, †International Productivity Monitor 20, no. 10 (2010: 68†84 57. Among others, see:
Economic Benefits of the Internet In the United states, United kingdom, France, and Germany, Version 2. 0†(Cisco systems, Inc.,January 2002
http://www. netimpactstudy. com/Netimpact study report. pdf; Donald A. Johnston, Michael Wade and Ron Mcclean, â€oedoes E-business Matter to SMES?
A Comparison of the Financial Impacts of Internet Business Solutions on European and North american SMES, †Journal of Small Business
Management, 45,3 (July 2007): 354-361 59. Irene Bertschek, Helmut Fryges, and Ulrich Kaiser, â€oeb2b or Not to Be:
http://econstor. eu/bitstream/10419/24055/1/dp0445. pdf 60. Juha-Miikka Nurmilaakso, â€oeict Solutions and Labor Productivity:
Evidence from Firm-Level Data, †Electronic commerce Research 9, no. 3 (2009): 173-81 61.
-watch/studies/special topics/2006/documents/TR 2006 ICT-Impact i. pdf 62. Concetta Castiglione, â€oetechnical Efficiency and ICT Investment in Italian Manufacturing Firms, â€
pdf; Carlo Milana and Alessandro Zeli, â€oethe contribution of ICT to production efficiency in Italy:
-level evidence using data envelopment analysis and econometric estimations, †OECD Science, Technology and Industry Working papers, no. 2002/13 (September 2002), http://dx. doi. org/10.1787/101101136045
PAGE 36 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 67. Paul-Antoine Chevalier, RÃ my Lecat,
Globalisation and Information technology: Evidence from France, †Economics Letters 116, no. 2 august 2012): ) 244†246, doi:
-32, http://www. infosci-journals. com/downloadpdf/pdf/ITJ2901 FXBCKLEGFC. pdf 69. H. O. Hagã n and J. Zeed, â€oedoes ICT use matter for firm productivity?
http://www. scb. se/statistik/publikationer/AA9999 2005A01 BR XFT0601. pdf; Hagã n et al â€oeinnovation matters: An empirical analysis of innovation 2002†2004 and its impact on productivity, â€
http://www. scb. se/statistik/publikationer/OV9999 2007A01 BR 00 X76BR0801. pdf 70. Rene Belderbos, Vincent Van Roy, and Florence Duvivier, â€oeinternational and Domestic Technology
Vincenzo Spiezia, â€oeare ICT Users More Innovative? An Analysis of ICT-Enabled Innovation in OECD
http://www. oecd. org/oecdjournal/1311011e. PDF#page=101 74. Ana Salomã Garcã a-Muã iz and Marã a Rosalã a Vicente, â€oeict Technologies in Europe:
Technological Diffusion and Economic growth under Network theory, †Telecommunications Policy 2014), doi: 10.1016/j. telpol. 2013.12.003
Broadband Networks Really Stand†(Information technology and Innovation Foundation, February 2013), http://www2. itif. org/2013-whole-picture-america-broadband-networks. pdf
82. M. Cardona, T. Kretschmer, and T. Strobel, â€oeict and Productivity: Conclusions from the Empirical
OECD, Country Statistical Profile 2012 (Investment Data and Shares of ICT Investment in Total Nonresidential GFCF;
) The Conference Board, Total Economy Database: January 2014 (Table 5; accessed April 2 2014), http://www. conference-board. org/data/economydatabase
/85. National Science Foundation, Science and Engineering Indicators 2014 (Figure 6-7, ICT business and
PAGE 37 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 89. Ibid. Major European countries included in this chart are:
Labor, 2011), http://ideas. repec. org/p/iza/izadps/dp5975. html. See also: Renaud Bourlã s and Gilbert
97. â€oenetworked Readiness Index 2014, †on the World Economic Forum website, accessed May 7, 2014
OECD Statextracts, Productivity Database By Industry 2012. Growth of labour productivity, in per cent, Business Services Sector;
ftp://ftp. jrc. es/pub/EURDOC/JRC84470. pdf. See also: Christopher Gust and Jaime Marquez â€oeinternational Comparisons of Productivity Growth:
The Role of Information technology and Regulatory Practices, †Labour Economics 11, no. 1 february 2004: 33†58, doi:
â€oethe Economic Importance of Getting Data protection Right: Protecting Privacy Transmitting Data, Moving Commerce†(European Centre for International Political economy/U s
Chamber of commerce, March 2013 https://www. uschamber. com/sites/default/files/legacy/reports/020508 economicimportance final revi sed lr. pdf
109. L. Christensen et al. â€oethe Impact of the Data protection Regulation in the EU€ (Intertic, 2013
http://www. intertic. org/new site/wp-content/uploads/Policy%20papers/CCER. pdf 110. Mike Butcher, â€oestupid EU Cookie Law Will Hand the Advantage to the US, Kill Our Startups Stone
Dead, †Techcrunch, accessed May 28, 2014, http://techcrunch. com/2011/03/09/stupid-eu-cookie-law
-will-hand-the-advantage-to-the-us-kill-our-startups-stone-dead/;/Meg Leta Ambrose, â€oethe Law and the
PAGE 38 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Loop†(Proceedings of the International Symposium on Ethics in Engineering science, and Technology
Information technology and Management Issues 2011†2012: An International Study, †Journal of Information technology 27, no. 3 (2012:
198†212; â€oetalking Points, †Information Services Group February 2013, http://www. isg-one. com/web/research-insights/talking-points/archive/1302. asp
116. Kevin Sneader et al. From Austerity to Prosperity: Seven priorities for the long term (Mckinsey and
-Indirect-taxes-Report-FINAL-DEC-2012. pdf 124. Ibid 125. Greg Sterling, â€oefrance Wants To Tax Facebook, Google †Personal data Collection, ††Marketing Land
January 21, 2013, http://marketingland. com/france-wants-to-tax-facebook-google-personal data -collection-31196; Jacob Albert, â€oefrance Wants to Tax Data mining,
and It†s Not a Bad Idea, †Quartz January 22, 2013, http://qz. com/45764/france-wants-to-tax-data-mining-and-its-not-a-bad-idea
/126. For theoretical background on the incentives faced by corporations, see: Harry Deangelo and Ronald W
http://citeseerx. ist. psu. edu/viewdoc/download? doi=10.1.1.278. 3739&rep=rep1&type=pdf 129. Taxation Trends in the European union:
Data for the EU Member States, Iceland and Norway Luxembourg: European commission-eurostat, 2013 130. Lorin M. Hitt, D. J. Wu,
and Xiaoge Zhou, â€oeinvestment in Enterprise resource planning: Business Impact and Productivity Measures, †J. of Management Information systems 19, no. 1 (2002:
71†98 131. Note: United states uses different size classes: 01-09,10-19,20-99,100-499,500+.+OECD
PAGE 39 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 133. S. Fabiani, â€oeict Adoption in Italian Manufacturing:
http://ideas. repec. org/p/cge/warwcg/70. html 135. Luis Garicano, Claire Lelarge, and John Van Reenen, Firm Size Distortions and the Productivity
-tr. org. tr/eu/DCR/cstudytheeconomicimpactofictlondonschoolofeconomics. pdf 138. OECD, Science Technology & Industry Scoreboard 2013 (OECD Publishing
Productivity Growth Since 2000 and Future Prospects, †International Productivity Monitor 25 (2013 65†83
-institute/insights/2013/pdf/state-of-outsourcing-2013-exec-findings-hfs. pdf 145. OECD Key ICT Indicators, â€oe10a.
See for example the sectoral focus on this European commission website: European commission Enterprise and Industry â€oeict for Competitiveness & Innovation, †(accessed May 16, 2014
An Input-Output Analysis, †Telecommunications Policy 37, no. 4†5 may 2013: 387†399 doi:
or Uber, or Google, or...†Bloombergview February 12, 2014, http://www. bloombergview. com/articles/2014-02-12/france-loves-tech-but-not
-amazon-or-uber-or-google-or -152. Miller and Atkinson, â€oeare Robots Taking Our Jobs, or Making Them?
PAGE 40 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 157. Miller and Atkinson, â€oeare Robots Taking Our Jobs, or Making Them?
Information technology and Innovation Foundation, October 2010), 70 http://www. itif. org/publications/good-bad-and-ugly-innovation-policy
http://www. nytimes. com/2010/08/17/business/global/17wto. html? r=1&partner=rss&emc=rss 161.
-france. fr/uploads/tx bdfdocumentstravail/DT252. pdf 162. P. D. Kaushik, and Nirvikar Singh, â€oeinformation Technology and Broad-Based Development
Dedrick and Kenneth L. Kraemer, â€oeindia's Quest for Self reliance in Information technology: Costs and Benefits of Government Intervention, †(University of California, Irvine:
Management and Center for Research on Information technology and Organizations, December 30 1992), http://crito. uci. edu/papers/1993/pac-005. pdf
163. Kenneth L. Kraemer and Jason Dedrick, â€oepayoffs From Investment in Information technology: Lessons from the Asia-Pacific Region†(University of California, Irvine:
Graduate school of Management and Center for Research on Information technology and Organizations, April 13, 2001 http://www. crito. uci. edu/git/publications/pdf/pac-037d. pdf
164. Kenneth L. Kraemer and Jason Dedrick, â€oeinformation Technology and Productivity: Results and Policy Implications of Cross-country Studies†(working paper, University of California, Irvine:
Center for Research on Information technology and Organizations, February 1999), 25 http://www. crito. uci. edu/itr/publications/pdf/it-productivity-2-99. pdf
165. See for example: Rob Frieden, â€oelessons from Broadband Development in Canada, Japan, Korea and the
United states, †Telecommunications Policy 29, no. 8 september 2005: 595†613 doi: 10.1016/j. telpol. 2005.06.002
166. Robert D. Atkinson and Daniel Castro, â€oedigital Quality of life: Understanding the Benefits of the IT
Revolution†(Information technology & Innovation Foundation, October 1, 2008 http://www. itif. org/publications/digital-quality-life-understanding-benefits-it-revolution
from Information technology Investments, †1793; Xavier Sala-i-Martin, â€oe15 Years of New Growth Economics:
Economies†(Information technology and Innovation Foundation, April 2014 http://www. itif. org/publications/how-ita-expansion-benefits-chinese-and-global economies
in the EU€ (Oxford Economics/AT&T), accessed October 3, 2013 http://www. corp. att. com/bemoreproductive/docs/capturing the ict dividend. pdf
PAGE 41 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 171. â€oecontribution to the Annual Growth Survey 2014:
A Single Market for Growth and Jobs: An Analysis of Progress Made and Remaining Obstacles in the Member States†(report from the Commission to the
U-US%20free%20trade%20agreement%20-%20sweden%20i%20focus. pdf 173. See for example: â€oesmall companies create 85%of new jobs, †Enterprise and Industry, European
Commission website, last modified January 16, 2012, accessed April 18, 2014 http://ec. europa. eu/enterprise/newsroom/cf/itemdetail. cfm?
Part 1, †Innovation Files (blog), June 22, 2012 http://www. innovationfiles. org/in-praise-of-big-business-part-1
-ilibrary. org/sites/entrepreneur aag-2013-en/02/02/index. html 177. Ibid 178. Danny Leung, CÃ saire Meh,
Daniel Castro, â€oethe False Promise of Data Nationalism†(Information technology and Innovation Foundation, December 2013), http://www2. itif. org/2013-false-promise-data-nationalism. pdf
183. See for example: â€oeprocessing of sensitive personal data in a cloud solution, †Datatilsynet, February 3 2011, http://www. datatilsynet. dk/english/processing-of-sensitive-personal data-in-a-cloud-solution/,and
â€oewill Not Let Norwegian Enterprises use Google Apps, †Datatilsynet, January 25, 2012 http://www. datatilsynet. no/English/Publications/cloud-computing/Will not-let-Norwegian-enterprises
-of-Google-Apps /184. â€oemerkel Proposes Secure European Web, †BBC News, February 15, 2014 http://www. bbc. com/news/world-europe-26210053
185. For example, Catherine Tucker has found that the EU privacy directive lowered online advertising effectiveness by 65 percent relative to the rest of the world.
Catherine Tucker, â€oeeconomics of Privacy†MIT Sloan and NBER, November 15, 2012 http://www. ftc. gov/sites/default/files/documents/public events/fifth-annual-microeconomics
-conference/tucker. pdf 186. David Jolly, â€oeeuropean Union Takes Steps Toward Protecting Data, †New york times, March 12, 2014
http://www. nytimes. com/2014/03/13/business/international/european-union-takes-steps-toward -protecting-data. html
187. David Streitfeld, â€oeeuropean Court Lets Users Erase Records on Web, †New york times, May 13, 2014
sec. A 188. Ibid 189. Bauer et al. â€oethe Economic Importance of Getting Data protection Right. â€
190. Mark Scott, â€oeuber Faces Rebukes in Europe, †Bits (blog) New york times, accessed April 18, 2014
http://bits. blogs. nytimes. com/2014/04/17/uber-faces-rebukes-in-europe /191. â€oepillar I:
Digital Single Market †Digital Agenda for Europe, †Enterprise and Industry, European Commission website, accessed May 15, 2014, http://ec. europa. eu/digital-agenda/en/our-goals/pillar-i
-digital-single-market; â€oepillar VII: ICT-Enabled Benefits for EU Society †Digital Agenda for Europe, â€
PAGE 42 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 Enterprise and Industry, European commission website, accessed May 15, 2014
http://ec. europa. eu/digital-agenda/en/our-goals/pillar-vii-ict-enabled-benefits-eu-society
PAGE 43 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 ACKNOWLEDGEMENTS The authors wish to thank Stephen Ezell, ITIF,
and Jon Aronoff, The Research Board, for providing input to this report. Any errors or omissions are the authorsâ€
alone ABOUT THE AUTHORS Robert Atkinson is the founder and president of the Information technology and
Innovation Foundation. He is also author of the books Innovation Economics: The Race for Global Advantage (Yale, 2012) and The Past And Future Of America†s
Ben Miller is an economic growth policy analyst at the Information technology and Innovation Foundation. He has a Master†s degree in International Development and
The Information technology and Innovation Foundation (ITIF) is a Washington, D c -based think tank at the cutting edge of designing innovation strategies and
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Why Europe Needs to Accelerate Productivity Growth BOX 1: PRODUCTIVITY, INNOVATION AND COMPETITIVENESS ICT and Productivity Growth
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