Daily Management Review

OECD: Global productivity needs technological support


The rapid development of information and communication technologies (ICT) in the last 15 years has coincided with a general slowdown in the growth of aggregate productivity, the OECD said in its report. One of the reasons for this paradox may be barriers to the spread of technology, because of which the gap between the avant-garde and lagging companies is increasing day by day. Poor governance, a lack of ICT skills and inadequate workforce positions negatively affect the level of technology penetration, while market incentives, including free market access, competition and the effective redistribution of labor and capital, reinforce this process.

Austin Community College via flickr
Austin Community College via flickr
The wide range of digital technologies that have emerged in the last decade has shaped an ecosystem that can provide significant productivity growth. However, they were not widely used in production even in European countries, and many companies still do not use technologies that are considered to be basic. According to the McKinsey Global Institute, Europe uses only 12% of the digital potential, the US - 18%. Based on European statistics (25 industries in 25 countries in 2010-2016 were taken into account), OECD analysts tried to identify which factors act as drivers for the introduction of technologies.

Although almost all European firms have access to broadband Internet, distribution of more advanced tools and applications (more expensive for implementation) is lagging behind: 48% of companies use social networks and 12.2% are active users of big data. The level of distribution of a specific technology also varies among countries and sectors of the economy, although marginal costs for the implementation of most of them either approached zero or rapidly declined in ten years. For instance, 60% of Finnish companies with ten or more employees use cloud services while there were only 18% of such companies in Poland in 2016. Enterprise resource planning systems (ERP) are installed by 62% of manufacturers of computer and optical equipment but only 15% of restaurant and hotel companies use it.

The OECD believes that the key conditions for success are the availability of infrastructure (broadband Internet and communication networks), the development of organizational capital (leadership skills, modern management practices and innovative working structures), as well as the availability of skilled labor and the continuous improvement of its skills. Thus, a high level of organizational capital is accompanied by a disproportionately high level of introduction of digital technologies in knowledge-intensive industries in comparison with all the rest. In the case of professional competencies, it is not only the IT specialists themselves, but also the basic computer literacy of the able-bodied population (which is affected by the digital environment, e-government services, training programs), and the knowledge and skills of employees in their positions.

Researchers attribute stimulating factors to competitive pressure and the simplicity of redistribution of material resources, whereas outsiders' lagging is most noticeable in industries protected from foreign and domestic competition.

According to OECD analysts, all these factors can be subject to the influence of public policy. Broader dissemination of high-quality Internet and improved infrastructure contribute to the introduction of more advanced digital applications. Governments are also advised to take care of the expansion of the capacity of firms to apply digital solutions, as well as to stimulate this process through structural reforms, competition development, investment in education and dissemination of best practices.

source: oecd.org