The impact of information technology on US industry

Abstract

This work analyzes firm-level investment in information technology and corresponding productivity through the use of a production function over the period from 1995 to 1997. The results are then compared to previous studies that utilized similar data and methodologies to compare productivity estimates over time. The analysis indicates that investment in IT enhances productivity over the period in question and has illustrated increasing returns over time. It cites such factors as advanced computer processing, software applications and Internet related technology, that facilitate communication of information, as potential drivers of productivity. This work then ranks US industries according to IT intensity and categorizes industry groups as either high, normal or low IT intensity. Once again, through the use of economic theory, we estimate productivity of investment in IT according to industry grouping and find that the higher IT intensive group experienced greater returns from investment in information technology. © 2002 Elsevier Science B.V. All rights reserved.