Computers, productivity, and input substitution

This paper examines the relationship between computers and economic growth using U.S. sectoral data from 1947 to 1991. The computer-producing sector-shows strong multi-factor productivity growth that reflects the fundamental technological progress behind the computer revolution. Although aggregate multi-factor productivity remains low, the computer-producing sector made a substantial contribution to its modest revival in the 1980s. In sharp contrast, computer-using sectors show little multi-factor productivity growth since 1973. For these sectors, the computer revolution is largely a story of traditional input substitution, investment and rapid capital accumulation with little evidence that computer investment affects multifactor productivity.