Beyond productivity-productivity and the three types of efficiencies of information technology industries

The purpose of this paper is to analyze productivity and efficiency of information technology industries of fourteen OECD countries. IT productivity has been studied for years and most papers have confirmed the IT productivity. Some even proved that IT productivity is far better than other factors. The impact of IT to the economy depends not only on the productivity but also on the size of IT production. Thus, to analyze productivity and efficiency of IT industries is important. They are the drive for the economic growth in the new economy. Although productivity has been analyzed and discussed in the information systems field for years, little research has been done in efficiency of IT. This paper analyzes the productivity and productive efficiency of fourteen OECD countries and compared them to each other. The models we used in this paper follow Kumbhakar's 1989 models [Rev. Econ. Stat. (1989) 595] and some other econometric models in other productive efficiency studies. By using these models, we were allowed to estimate three different types of (in)efficiencies-technical, allocative and scale, and the percentage loss due to the inefficiency. (C) 2003 Elsevier Science B.V. All rights reserved.