ÄR SOLOWPARADOXEN FORTFARANDE AKTUELL?

Abstract

The discussion concerning the impact of information and communication technology (ICT) on economic growth has been going on for a long time. The topic has been debated widely between supporters of the exogenous theory, where innovation is the result of chance, and supporters of the endogenous theory who argue that innovation is a result of what people and businesses do.

The paradox which stats that it does not matter how heavily a company invests in ICT, since it will have no impact on how efficient the company's production develops has been named after Nobel Laureate Robert Solow. In his article, We’d better watch out in The New York Times Book Review on July 12, 1987 he expressed the nowadays classic phrase "we see the computer age everywhere but in the productivity statistics", which became the starting point for the “Solow paradox”.

This paper aims to investigate if this paradox is still valid or if the investments made in ICT has had an impact on productivity in the Swedish economy during the past 20 years. To refine the analysis, three different industries have been selected; Agricultural, Forestry and Fishing industry; the Manufacturing industry and the Finance and Insurance industry.

The results show that the paradox is still relevant for the Agricultural, Forestry and Fishing industry and partially relevant for the Finance and Insurance industry. For these industries, the main driver for productivity and growth is capital. For the Manufacturing industry, it is possible to reject the paradox since ICT investments is a main driver for productivity and growth. However, there is not one truth or one paradox that can be applied to all sectors of an economy. Each sector has its own potential to create economic growth and prosperity and the impact of technological development is scattered. However, you cannot escape the fact that capital is still very important for economic growth and productivity, which would indicate that the Solow paradox is still relevant to some extent.