An empirical analysis of the correlation between productivity enhancement and ICT investments at the European level

The initial goal of this thesis is to analyse the effects of Information and Communication Technologies (ICT) as a powerful phenomenon that changes world’s equations on productivity level in European countries. This study is a brand new research on these two topics as there are not loads of comprehensive data available for European countries on productivity related concepts such as Value Added or Total Factor Productivity (TFP). Productivity as a measure of performance show the capability of a specific entity to fulfill the need of its users by an optimized exploitation of resources. Considering this concept to a country level, we can say by measuring different productivity indices success rate in reaching higher levels of economic and welfare of society can be measured. Furthermore, every aspect of value creation cycle depends in a way to ICT. If we want to analyse the productive capacity of a country, automatically we are considering the effect of ICT owing to the fact that all inputs (labour, material, energy, capital, etc.) directly or indirectly get affected by ICT penetration. Input values, quantities and quality depends highly on how digitalized is the procedure of maintaining that input. Nature of the study is built on the combination of previous researches, academic literatures’ scrutiny and analysis of related data and in this regard both academic and experimental contexts have being analysed. Theoretical and empirical studies related to the productivity management and the effects of ICT on economic growth have been reviewed. As a back bone to our work, literature’ streams on productivity management, measurements, factors and indicators had been studied. Moreover, viewpoints on ICT as an eminent phenomenon in three last decades and also academic resources that investigate the dependency of productivity on digital technology were scrutinized. In the result section of the study we applied a comparative perspective. Regarding the lack of data for some specific indicators like Value Added, we considered a sample group of European countries and tried to keep the balance of different characteristics of European Union attributes in that sample group, all European countries’ data has been taken into account for the rest of measured indices and indicators. Measured values clustered in two main groups: productivity related and ICT related indicators. Comprehensive comparison between these two types of indicators has been carried out. Besides various analysis of essential indicators, this study confirms the positive correlation between productivity growth and digital technology investment.