Can general purpose technology theory explain economic growth? Electrical power as a case study

Abstract

Does the concept of general purpose technologies help explain periods of faster and slower productivity advance in economies? This paper develops a new comparative dataset on the usage of electricity in the manufacturing sectors of the USA, Britain, France, Germany, and Japan and proceeds to evaluate the hypothesis of a productivity bonus as postulated by many existing GPT models. Using the case of the diffusion of electrical power in the early twentieth century, this paper shows that there was no generalized productivity boost from electrical power diffusion. The productivity gains from this GPT varied widely across economies and industries, suggesting that the power of GPTs to predict aggregate or sectoral growth is limited. © 2014 The Author.