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growth accounting analysis of the Italian economic growth over the last twenty years

The Slow Italian Growth in the 1990s: is the Gap in Information Technology the Story? A. Bassanetti, M. Iommi, C. Jona-Lasinio, F. Zollino. growth accounting analysis of the Italian economic growth over the last twenty years. TFP growth vs inputs growth

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growth accounting analysis of the Italian economic growth over the last twenty years

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  1. The Slow Italian Growth in the 1990s: is the Gap in Information Technology the Story?A. Bassanetti, M. Iommi, C. Jona-Lasinio, F. Zollino Nesis - Rome, June 26th and 27th 2003

  2. growth accounting analysis of the Italian economic growth over the last twenty years TFP growth vs inputs growth Assessing the role of ICT capital accumulation. Aggregate and sectoral analysis Decomposing aggregate TFP growth into the contribution from each industry (1990’s). Nesis - Rome, June 26th and 27th 2003

  3. ICT and non-ICT shares on total nominal investment, 1982-2001 Nesis - Rome, June 26th and 27th 2003

  4. ICT/GDP: 1997-2001 Nesis - Rome, June 26th and 27th 2003

  5. ICT investment expenditure by sector: 1992-2001 Nesis - Rome, June 26th and 27th 2003

  6. Methodological framework VA = value-added L = labour input KI = ICT capital input KO =non- ICT capital input A = technology svjj = share of input j Nesis - Rome, June 26th and 27th 2003

  7. Methodological framework FD = final output L = labour input KI = ICT capital input KO = non- ICT capital input M= imported intermediate inputs A = technology sdjj = share of input j Nesis - Rome, June 26th and 27th 2003

  8. Methodological framework Y = sectoral output L = labour input KI = ICT capital input KO =non- ICT capital input X= intermediate inputs A = technology syjj = share of input j Nesis - Rome, June 26th and 27th 2003

  9. Methodological framework Domar’s aggregation formula: Aggregate TFP growth depends both on TFP growth in each industry and on shifts of economic activity among industries with different TFP growth rates Nesis - Rome, June 26th and 27th 2003

  10. Methodological framework • The rate of change of the flow of aggregate capital services, Kt, is a Tornqvist aggregate of the flow of services of the individual types of capital goods: v it=  it S it/ ni=1  it Sit Sit= productive capital stock at constant prices of type i asset. Vit= share of asset i in the value of total cost for capital services. Nesis - Rome, June 26th and 27th 2003

  11. Methodological framework • Changing weight index Free of the substitution bias • Cost-shares weightsAllow to account for the heterogeneity in marginal productivity of the different types of capital Nesis - Rome, June 26th and 27th 2003

  12. Data • nine types of capital goods that comprises non-residential gross fixed capital formation: hardware; telecommunications equipment; software; machinery and equipment; furniture; road transport equipment; air, see and rail transport equipment; non-residential buildings; other intangibles and services. Nesis - Rome, June 26th and 27th 2003

  13. Caveats • Gross fixed capital formation data are the provisional product of an ongoing joint project on productivity measurement at the Italian Institute of Statistics and at the Bank of Italy and therefore they might be subject to minor revisions; • The hypotheses we have adopted regarding the mean service lives and the pattern of efficiency decay need to be put under scrutiny; • The deflators we have used are likely to miss a non-negligible amount of the change in the quality of capital goods. Nesis - Rome, June 26th and 27th 2003

  14. Contributions to aggregate value-added growth, 1980-2001 Nesis - Rome, June 26th and 27th 2003

  15. ICT and non-ICT contributions to aggregate value-added growth Nesis - Rome, June 26th and 27th 2003

  16. Contributions to final output growth, 1992-2001 Nesis - Rome, June 26th and 27th 2003

  17. Industry contributions to aggregate TFP growth, 1992-2001 Nesis - Rome, June 26th and 27th 2003

  18. Sources of growth by industry, 1992-2001 Nesis - Rome, June 26th and 27th 2003

  19. Conclusions • Total factor productivity growth accounts for almost half of the total economy growth in the average of last twenty years but there is a great deal of heterogeneity during sub-periods. • Counter-cyclical TFP during the 1995-2001 period. • Small absolute average contribution from ICT’s but anyway it was more than 30% of the contribution from Non-ICT’s. • Financial Intermediation, Business Services and Trade sectors show the highest contribution from ICT’s and are among the sectors that gave the higher contribution to aggregate TFP growth. Nesis - Rome, June 26th and 27th 2003

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