No. 109. TECHNICAL EFFICIENCY AND THE ROLE OF INFORMATION TECHNOLOGY: A STOCHASTIC PRODUCTION FRONTIER STUDY ACROSS OECD COUNTRIES

Published in DISCUSSION PAPERS

S.P. Dimelis, S.K. Papaioannou. 2010.

 

This paper investigates for possible Information and Communication Technology (ICT) effects in reducing aggregate technical inefficiency. A stochastic production frontier is simultaneously estimated with a technical inefficiency model using a panel of 17 OECD countries in the period 1990-2005. Clear evidence is found for a significant ICT impact in the reduction of cross country inefficiencies. In particular, the results show that, on average, ICT contributed by more than 5% in the increase of technical efficiency across countries and over time. The efficiency estimates indicate that the most efficient countries are Belgium and Netherlands, followed by the USA. However, it seems that several south European countries are less efficient and have not yet converged to the efficiency levels of the most developed OECD countries.

 

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