International comparisons of productivity growth: the role of information technology and regulatory practices

While information technology (IT) is credited with the recent acceleration in productivity in the United States, many other industrial countries have not experienced a pickup in productivity growth. To explain this productivity divergence, we use panel data from 1992 to 1999 for 13 industrial countries and find that this divergence is driven in part by differences in both the production and adoption of information technologies. Based on this finding, we proceed to investigate what factors might play a role in explaining differences in IT adoption. Our results support the view that burdensome regulatory environments and, in particular, regulations affecting labour market practices have impeded the adoption of information technologies and have slowed productivity growth in a number of industrial countries. (C) 2003 Elsevier B.V. All rights reserved.