An Updated View of the Productivity Paradox in the Early 21st Century

Information Technologies (ITs) are an inseparable part of modern life and one of the key drivers of economic activity. However, rapidly growing investments in IT, since the 1970s, coincided with poor productivity gains. This problem of the ‘productivity paradox’ has attracted much academic attention. Using statistical data from 21 developed countries, this paper analyses the trends of productivity paradox from 1995 to 2005 employing three-level methodological approach to assess the productivity. The first level analysis examines macroeconomic indicators (GDP per capita and IT investment growth), the second level considers the internal structure of IT investments, and the third level analyses labour and multi-factor productivity. The findings of the study suggest there is a high positive correlation of IT investments with GDP growth. At the same time labour and multi-factor productivity do not significantly correlate with technology investments