Economical impacts of IT on industries in Japan

Kobayashi, Minoru; Hiromatsu, Takeshi; Tsubone, Naoki; Kurita, Manabu; Ohira, Gosei

Investment of IT (Information Technology) came to be positively advanced in various industries after 1980. However, in the late 1980s, as for the improvement in the productivity by the investment of information systems, the economist Robert Solow developed the "paradox of productivity theory" which claims that the introduction of information systems does not lead to higher productivity. On the other hand, as a result of good strategy on the development of IT industries, the U.S. economy after 1991 was in good condition over a span of 10 years, until 2001. The Federal Reserve Bank Chairman Alan Greenspan came to suggest "the New Economy theory", which is caused by the investment of IT. It posed a problem in the1980s about investment of IT in the industries and the companies; it is not clear whether or not it made a good impact on corporate management. In this paper, we have measured the economical effects of IT investment by industries in Japan. Consequently, in Japan, the effect of IT investment in most industries will be low or minus in the first half of the 1990s, compared with the second half of the 1980s. However, the effect of IT investment is again changed to a rise or plus after 1995. This has a big relation to the advancement of IT, such as evolution of an information network, and there is also change in the management of IT itself. These results will support our objective which is to consider the directions of more effective IT investment, as well as to give the right direction of corporate management for the future in Japan.

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Academic Units
Center on Japanese Economy and Business
Center on Japanese Economy and Business, Graduate School of Business, Columbia University
Center on Japanese Economy and Business Working Papers, 213
Published Here
February 11, 2011