The function of latest applied sciences in Spain’s productiveness
CaixaBank search | Think about a bunch of mates discussing the information in a bar. One in every of them exclaims: “The opposite day I learn that computer systems are actually in a position to determine pictures that make fewer errors than a human being!” This may most likely be adopted by different examples on the earth of the probabilities provided by new applied sciences. It’s also very seemingly that many people have had a dialog like this, which reveals the how stunned we’re by technological advances, in addition to the magnitude of their financial and social affect.
Past this anecdote, the query we’re requested is whether or not this affect is of the magnitude it appears and, subsequently, whether or not new applied sciences have the potential to improve the long run progress of the Spanish financial system. On this article we’ll see that new applied sciences have certainly promoted the expansion of labor productiveness in Spain previously and that they may achieve this once more on this new technological period we’re getting into.
A primary evaluation of the connection between the diploma of penetration of latest applied sciences and labor productiveness reveals that there’s a constructive correlation between the expansion of the 2 variables over the past 20 years. As well as, this correlation appears extra pronounced between financial actions within the service sector (see first graph).
A better take a look at the principle determinants of productiveness
Sadly, the graph we noticed above affords an incomplete evaluation of the issue. It’s because there could also be different elements that positively contribute to productiveness progress however, on the similar time, have a constructive correlation with productiveness. diploma of penetration of latest applied sciences. For instance, think about a world during which the productiveness of a sector relies upon solely and solely on the schooling and coaching of its employees, and that in sectors with extra expert employees, the affect of latest applied sciences is increased. On this instance, the correlation between the progress of latest applied sciences and labor productiveness could be constructive, however this might be the results of the extent of schooling and coaching of employees in every sector, and never the results of new applied sciences.
To take this into consideration, we carried out a extra full statistical train during which, along with contemplating variables comparable to labor productiveness and new applied sciences for every sector, we included within the evaluation different variables prone to be affect the outcomes, like all different classes. of bodily capital. The important thing variable in our evaluation is the elasticity of labor productiveness progress in comparison with capital progress in new applied sciences. Merely put, it’s the sensitivity of productiveness progress to a 1 pp enhance in capital progress in new applied sciences.
Lastly, our evaluation distinguishes between mixture elasticity and elasticity disaggregated by sector: on the one hand, we estimated the elasticity for all sectors of the financial system and, however, we additionally estimated the elasticities in keeping with sure traits of every sector. Particularly, we estimated the disaggregated elasticities for 4 teams: low-tech industries, high-tech industries, low-tech providers, and high-tech providers.
The outcomes of the empirical evaluation (see second graph) present how, within the mixture case, we receive an elasticity of the order of 0.12, which is not at all negligible. For instance, it suffices to say that the estimated elasticity of the issue “remainder of capital” – that’s, all classes of capital inventory not labeled as new applied sciences, which incorporates issues as vital to a rustic’s productiveness as industrial crops and all types of equipment – is 0.26. Nonetheless, this mixture consequence masks vital disparities between sectors, with an elasticity various between 0 and 0.25. As may be anticipated, the best elasticities are related to the 2 teams of industries that we classify as excessive tech.
The function of capital in new applied sciences in financial progress
After acquiring an estimate of the affect of latest applied sciences on labor productiveness, we carried out an train that extra clearly reveals the significance of this type of capital for the financial system. Extra exactly, we decompose the expansion of labor productiveness into three elements: the contribution of capital in new applied sciences, that of remaining capital – the sum of the 2 constitutes the overall inventory of bodily capital within the financial system – and that of the residual part, which we name “different”. This final class consists of components starting from human capital to commerce openness, temporality and different elements that fall underneath what is named whole issue productiveness (TFP) .7 We present the ends in the third graph.8
For the financial system as a complete, we see that the expansion of latest applied sciences explains slightly greater than the 14% of cumulative progress in labor productiveness between the intervals 1996-1998 and 2014-2016.. The remaining capital explains about 10 pps, that are offset by the damaging contribution of the “different” part. This result’s shocking for 2 causes: the primary is the sturdy contribution of technological capital, and the second is the damaging contribution of the “different” part.
Concerning the primary factor, it needs to be famous that the common annual progress of this part over the aforementioned interval was considerably increased than that of the “the rest of capital” part: respectively 6.1% towards 1.3%. As such, though the elasticity of capital in new applied sciences is decrease than that of the remainder of capital, its sturdy progress explains its vital contribution to productiveness progress. In distinction, the damaging contribution to labor productiveness progress throughout this era of the “different” part is per different estimates that present a damaging contribution of TFP.
Wanting in additional element on the contributions to progress by sector, we see very completely different outcomes. If we examine the expansion charges of labor productiveness, tThe 2 sectors that stand out essentially the most are these labeled as excessive expertise, each for the economic sector and for the service sector. Nonetheless, the sources of progress have been very completely different between them. Whereas in high-tech providers, the principle supply of progress has been capital progress in new applied sciences, within the case of high-tech business, capital in new applied sciences made a extra modest contribution. In distinction, the low-tech service sector skilled little progress in labor productiveness through the interval underneath overview. This is because of a damaging contribution from the residual “different” part, which was offset by the expansion contributions of each forms of capital. To complete, productiveness progress within the low-tech industrial sector is especially defined by progress within the “remainder of capital” class.
Can we anticipate new applied sciences to present new impetus to progress?
Earlier than diving into the conclusions, we wish to provide the reader a theoretical train geared toward answering the query we posed at first of the article: to what extent can new applied sciences act as an engine of European financial progress. , and particularly for Spain? In earlier recordsdata we defined that the world financial system faces a interval of decrease productiveness progress than in different historic booms. This part affords some situations that enable us to think about to what extent the introduction of those new applied sciences can stimulate labor productiveness progress in Spain.
We take into account two situations. The primary, extra pessimistic, assumes that the expansion of capital funding in new applied sciences shall be half of that traditionally noticed over the interval 1996-2016, whereas the second, extra optimistic, assumes progress 50% larger than the historic common (see desk).
A 50% enhance (optimistic situation) within the progress of funding in new applied sciences in comparison with the historic common would result in a rise in productiveness progress (and subsequently GDP) of simply over 0.3 proportion level per 12 months. 12 months by 12 months. Whereas this progress differential could seem small from 12 months to 12 months, collected over a interval of 10 years, which means that the GDP could be increased by 3.5% in comparison with a situation the place funding in new applied sciences evolves in step with the historic common. When it comes to GDP per capita, this might equate to a distinction of round 1250 euros.
This optimistic situation that we now have simply introduced might even show to be conservative, if we take into account that the potential of latest applied sciences might undergo a transition section during which companies and shoppers are nonetheless studying to make use of them successfully. Which means that sooner or later, the productiveness progress related to investments in new applied sciences may very well be larger than previously, as purposes are consolidated, as new enterprise fashions mature, as employees are educated. improves and the elements of manufacturing are reallocated. Due to this fact, our train might even underestimate the affect of latest applied sciences on future financial progress taking as a reference a time period that would result in a technological “transition”.
In conclusion, given the outcomes introduced on this article, ought to we proceed to make progress within the use and diffusion of latest applied sciences with the intention to revive financial progress? In precept, the reply is “sure”, however allow us to do not forget that the primary article of this file underlined that, along with its constructive affect on productiveness, new applied sciences can have disruptive results on the labor market (within the type of job destruction) and for the productive construction (by selling the emergence of supercenterprises). A response with all the required nuances subsequently requires an evaluation of those different dimensions, to which we’ll dedicate a future File.
Now, if we give attention to what we now have discovered from this empirical evaluation, it’s plain that the introduction of latest applied sciences has had a big affect on labor productiveness in Spain over the previous twenty years. This affect will not be homogeneous from one sector to a different, however it’s somewhat extra vital in these which produce items and providers thought of as excessive expertise. Even so, on the mixture stage of the financial system as a complete, the impact was appreciable: within the absence of funding in these applied sciences, labor productiveness in Spain would have virtually stagnated between 1996 and 2016.