Information, Technology, and Innovation: Resources for Growth in a Connected World

CHAPTER 14

Productivity

There are some structural issues with our economy, where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM; you don't go to a bank teller.

—President Barack Obama, June 14, 2011

Do computers and similar technologies make economies grow? Do these technologies displace workers? How might information and technology improve economic performance, whether at the firm, sector, or national level? Because previous technologies augmented physical power and mastery, they offer only limited insight into the impact of technologies that expand people's abilities to remember, to know, and to connect.

The debate over the relationship between automating technologies and unemployment is not new, as Adam Smith's famous example of pin making goes back to 1776 (see Chapter 8). Trying to understand services productivity is particularly messy: That automated teller machine does not merely replicate the pin factory or behave like industrial scenarios. Finally, trying to quantify the particular contribution of information technology (IT) to productivity, and thus to the current unemployment scenario, proves particularly difficult. Nevertheless, the question is worth considering closely insofar as multiple shifts are coinciding, making job seeking, managing, investing, and policy formulation difficult, at best, in these challenging times.

Classic Productivity Definitions

At the most basic ...