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Communication Networks, ICT and Productivity Growth in Europe

This paper looks at the channels through which communication networks affect productivity growth. We construct an EUKLEMS dataset (8 countries) modified to include wireless spectrum purchases and quality-adjusted prices for all components of ICT (i.e., including communication equipment and computer software). We examine the dataset's implications for detecting network effects via (a) metrics introduced in this paper, (b) sources-of-growth analysis using capital measures more up to the task than heretofore available, and (c) econometric estimation of ICT externalities. We zero in on whether communication capital (defined as the core infrastructure of the internet and wireless networks) played a special role in the post-2002 economic growth of Europe and find evidence suggesting that it did.

This working paper is complimentary.