An interesting graph, Roger.Robert Solow famously quipped in a 1987 review of the book “Manufacturing Matters: The Myth of the Post-Industrial Economy” that: “[y]ou can see the computer everywhere but in the productivity statistics.” A remark that has given rise to what is often called the “Solow productivity paradox”. It wasn't until post-1995 that the effects of computers finally showed up in the U.S. productivity statistics. The point here is that productivity gains can be hard to find and even when found there is a long lag between the technological innovation and the productivity increases showing up. Computers started to play an increasing role for business in the U.S. in the 1970s but it was not until the mid-1990s that productivity increases showed up in the data. A delay of some 20-25 years. So the idea that "rapid MFP growth [...] coincides with the widespread adoption of the personal computer in New Zealand workplaces; the opening up of the Internet from 1992 onwards; and the rapid take-up of the mobile phone as an essential tool of business" is implausible simply on a timing bases. Technological innovation and the MFP growth simply do not coincide as Trotter argues.
As you quite rightly state, MFP measures the influence of innovation and technological improvements on the productivity of our business enterprises.
Have you given any thought to the fact that the period of rapid MFP growth depicted in the graph coincides with the widespread adoption of the personal computer in New Zealand workplaces; the opening up of the Internet from 1992 onwards; and the rapid take-up of the mobile phone as an essential tool of business?
All of these technological changes were responsible for substantial productivity gains, but none of them are attributable to the neoliberal economic reforms introduced by Roger Douglas and Ruth Richardson.
Wednesday, 9 March 2011
Chris Trotter on technological innovation and productivity growth
In a posting, Reply to Chris Trotter, at his blog Roger Kerr quotes Chris Trotter as saying,