Impact of Cloud Use on ICT Investments and Labor Productivity

Slide Note

This study analyzes the relationship between cloud use, ICT investments, and labor productivity across countries and industries from 2014 to 2020. Findings reveal a mixed impact of cloud adoption on productivity, with variations observed across sectors. The results suggest a potential substitution effect between cloud services and traditional IT hardware investments. Further investigation is needed to understand the underlying factors driving these sector-specific productivity outcomes and implications for economic growth.

aime_107 Follow

Uploaded on Mar 10, 2025 | 0 Views

Download Presentation

Please find below an Image/Link to download the presentation.

The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.

You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.

Download Presentation

The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.

E N D

Presentation Transcript

Comment on Cloud Computing, ICT Investments and Productivity by Thomas Niebel & Niklas Schomberg IARIW conference 2024 Diane Coyle Bennett Institute, University of Cambridge

What the paper does Cross-country (17) and cross-industry (19) descriptive analysis for 2014- 2020 of relationship between cloud use (extensive margin) and (a) investment in ICT hardware and (b) labour productivity EUKLEMS-INTAN and EU ICT survey data limitations Standard production function set-up (augmented Cobb Douglas) Motivation: use of cloud is a switch from fixed investment to variable expenditure. Do firms invest less as a result? Use of cloud may affect productivity through several channels. What is the evidence on both? Prior empirical literature somewhat mixed. No clear evidence on substitute/complement for ICT investment. Positive link to labour productivity only in manufacturing. 2

The results Cloud use has trended up strongly but substantial variation across industries & countries No relation between extensive-margin cloud use and ICT investment at industry level; but negative relation (ie substitution) between cloud & investment in IT hardware, driven by service sector industries with low digital intensity No relation between extensive-margin cloud use and labour productivity in aggregate. But some evidence of a positive relationship for manufacturing Cloud computing adoption in less-digital services associated with decline in labour productivity 3

For whole sample, no relationship between cloud use and labour productivity unless year dummy variables excluded 5

Implications? The underlying data to analyse this significant economic phenomenon are inadequate (80% of companies using cloud in many of countries in sample) Extensive margin only, not intensity of use What cloud services? Manufacturing and services are significantly different, whole-economy analyses of limited use. (Why?) Heterogeneity across sectors and firms too: what are the hypotheses about what s driving this? Eg why is the productivity relationship positive only in manufacturing? Striking J-curve effect for less digital-intensive services implications for hopes of an AI productivity silver bullet? Impact of market structure in cloud sector? 7