1. ICT impact assessment by linking data Economic and Labour Market Review October, 2009 Analysis of ICT statistics in 13 countries, building economic analysis across 200,000 firms Tony Clayton, Mark Franklin, Peter Stam UK Office for National Statistics

2. The Solow Paradox 'You can see computers everywhere except in the productivity statistics Robert Solow, New York Times 1989 Where, when, and how, you look for ICT impacts is important for what you find ONS / EU ICT Productivity Study 2008.

3. UK led Eurostat project Launched 2006 Linking data sources To identify how ICT adoption affects business behaviour and performance Project focus shift: started with Firm level analysis at national level finished with Cross-country industry level analysis 2006/72007/8 U.K Italy Denmark Sweden Netherlands Finland Austria France Slovenia joined by Germany Czech Republic Ireland Norway 200,000 firms in 13 countries

4. Linked together: - ICT metrics from common e-commerce surveys - Data about firms from business registers - Input and output data from production surveys ….. plus other data for lead countries Evidence – from surveys

5. Evidence – from micro to macro Secure Environment Disclosure controls Cross Country Datasets Merge with all countries output datasets Merged Datasets Code execution Data system and Selection (micro) Firm Data Analytical code Production Survey E-Commerce Analysis by Industry Business Register Output dataset Country-specific Source Surveys Output dataset Output dataset Link to other datasets (macro)

6. Evidence - analysis Types of analysis New results; three main types; Firm level regressions across all countries, using standardised methods and data from ICT use surveys, production surveys and business registers from all 13 countries Firm level regressions across 'lead' countries, on skills, offshoring, innovation, investment... both tend to identify 'within firm' productivity effects of ICT use Cross industry / country analysis using comparable indicators developed from microdata, combined with other sources... analysis catches 'between firms' effects as successful business drive out unsuccessful ones.

7. ICT use data explains impacts well at firm level Impacts - firm level ICT use in manufacturing - positive labour productivity effects for all 13 countries in the study, and positive multifactor productivity in majority ICT use in services - more differentiated links with productivity, depending on country and industry; for the UK, France, Nordic countries and Netherlands positive correlations are clear; elsewhere not Nordic states, Netherlands, UK and France are countries in our study where ICT use by firms, on comparable basis, is more intensive; seems to show increasing returns to ICT intensity not seen in other economies ICT links to external market mechanisms important -ICT enabled transactions within businesses have moderate effects -External supplier / customer links more powerful

8. ICT use data explains impact even better for industries Impacts – industry level Relationship to productivity stronger than firm level -Industry differences across EU countries still evident -Impacts of ICT use even stronger, as data captures substitution effects Market mechanisms show up strongly -Clear relationship between intensity of IT use and market dynamism -Higher ICT use related to greater probability that firms will gain or lose market share (but which is the cause and which the effect?) Critical mass effects still there -Nordic countries, Netherlands UK, France show strongest relationships

9. Impacts – industry level ICT use related to performance - labour productivity

10. Innovation impacts ICT and the innovation story: Firm Level Results (UK, Netherlands, Sweden) ICT networks support knowledge production -More broadband enabled workers => more external ideas in innovation -More networked employees=> more new products / services ICT helps marketing new products -Netherlands analysis shows e-commerce linked to innovation success often ICT is the innovation - ICT use and process reorganisation drive productivity in new NL analysis

11. Why it matters for UK UK is among the countries in which ICT investment and use by firms is - above critical mass for gains from ICT - in the territory where increasing returns apply ICT impacts are clear across all UK industries, but with differences in key drivers: - IT investment and supply chain links in manufacturing - E-commerce and customer links in distribution services - Broadband enabled workers particularly strong in business services.

12. Next Steps Broadening the analysis Longer data series, and more countries - to solve some problems identifying chicken and egg Link to more datasets on related issues - R&D / innovation / skills / organisation / e-business links Differences between business types and models -Impacts depend on the business you are in, what are differences? Understanding how ICT use changes competition -US and EU data tell same story – market effects matter most -ICT networks strengthen competitive market effects – but how?