ICT, Skills and Productivity Growth US–German High-Skill and ICT Investments Complementarities

This paper analyzes post–1991 sectoral US and German productivity growth and finds supporting evidence that productivity growth accelerations were largely spurred by interaction of ICT investment and high-skill intensity. While the US experienced dramatic increases in productivity growth in High-Skill-Intensive goods-producing and services sectors, German counterparts substantially lagged behind. Detailed industry analyses reveal that High-Skill-Intensive services employed most of Germany’s investments in ICT during 1991–2005 and that productivity accelerations were induced by ICT-skill complementarities, especially in the Finance sector. On the contrary, lacking ICT productivity effects in Business Services are traced as main culprit for Germany’s strong decline in aggregate productivity of market services. Within German High-Skill-Intensive goods-producing industries, especially Office Machinery & Computers managed to increase their productivity growth by ICT-skill complementarities. JEL Classification: O3, O4