1. Digital technologies and their impact on industry productivity performance Dean Parham and Peace Segarajasekeran 15 September 2015

2. BCR’s digital productivity project >Digitisation everywhere >We know ICTs had productivity-enhancing effects in the 1990s – jointly with economic reforms >Where are we now?

3. BCR’s Digital Productivity Project >Productivity growth slower – Aust & RoW >Why? – Fewer ICT/digitally based opportunities? – Opportunities not being realised? – Gains being swamped by other factors? – Gains not being measured?

4. BCR’s Digital Productivity Project >Primer released >Update growth accounting – Based on ABS national accounts data >Case studies >Firm-level econometric analysis >Tackle the hard measurement issues

5. Growth accounting LABOUR PRODUCTIVITY GROWTH MFP growth Capital deepening Non-ICT capital deepening ICT capital deepening Increasing the ratio of capital to labour Product & process innovations ICT disruptive change gen purpose tech

6. Previous work – PC (2004) Labour productivity growth:3.2 %pa Capital deepening:1.3 pp ICT capital deepening 1.0 pp (30%) Hardware0.6 pp Software0.3 pp Non-ICT capital deepening 0.4 pp MFP growth1.8 pp Over 1993-94 to 1998-99 Estimates not for quotation

7. Broad trends: net capital stocks Entire economy

8. Broad trends 1993-94 to 2003-042003-04 to 2013-14 LP growth (%pa)3.1 2.1 Capital deepening1.3 2.2 ICT cap deepy̴y/2 ?? Non-ICT cap deep MFP growth1.8-0.1 Estimates not for quotation

9. Big differences across industries – ICT capital deepening 1990s2000s Manufacturing0.70.6 Wholesale1.10.9/0.4 (late) Retail0.60.6/0.2 (late) Info, media, comms1.41.0 Financial1.71.5/0.7 (late) Prof, scien, tech0.40.4 Estimates not for quotation

10. A new element: ICT and capital productivity Non-ICT capital productivity growth: Manufacturing: -23% Wholesale7% ?? Retail 27% Info, media, telecoms 2% Finance125% Over 1989-90 to 2013-14 Estimates not for quotation

11. ICT and capital productivity Assets: >Land >Buildings >Road vehicles >Inventories

12. (Very) tentative conclusions >Growth in use of ICTs has continued in the 2000s >But slowed down after 2007-08 – especially hardware >Greater use of software in the 2000s >Slower rate of ICT capital deepening on average >Effect of ICTs on productivity of other assets has been overlooked – high correlation with ICT use in some industries/assets – no improvement in capital productivity in manufacturing