Information Technology Investment, Economic Growth, and Employment

During the past thirty years, the economy of the USA, along with other industrialized countries, has experienced several noticeable trends, namely, the economic slowdown, the tremendous increase in the amount of information technology investment, and fast structural change in terms of employment. With slow economic growth and fast IT capital accumulation, the so-called “information technology (IT) productivity paradox” becomes a prevailing concept in literature. Many researchers have attempted to solve the paradox in firm-level analysis, but a macroeconomic analysis, using a nation as an analysis unit, is not common in MIS research. By considering the complex triangular relationship of the above economic trends, this paper applies econometric models and macroeconomic theories to solving the IT productivity paradox. An emphasis is placed at the impact of information technology on the structural change of employment, and at the impact of the structural change on productivity. The authors demonstrate that the structural change could unravel the IT productivity paradox and provide a prediction of the future economic growth.