Does ICT boost Dutch productivity growth?

From an historical and international perspective, Dutch labour productivity growth rates have been lacklustre. Using a growth accounting framework, this document analyses whether ICT has recently boosted Dutch labour productivity growth, similar to developments in the US. Labour productivity growth in the Dutch market sector slightly accelerated in the second half of the 1990s. The acceleration seems to be related to the production and use of ICT. The productivity performance of the Dutch ICT sector accounts for a large share in the rebound of labour productivity growth. Strong productivity growth in the ICT sector is partly due to increased efficiency in the production of ICT products, particularly ICT-services. Users of ICT benefit from its opportunities as well. Labour productivity growth rates markedly accelerated in ICT-intensive industries in the late 1990s. The effect of ICT on Dutch labour productivity growth is not lower than that witnessed in other OECD countries (except for the US). Nevertheless, Dutch labour productivity grew slower than productivity in most other OECD countries because of lagging productivity growth rates, particularly in the services sector. Due to slower growth rates of labour supply, Dutch labour productivity growth must increase in upcoming years in order to prevent a substantial decline in GDP growth. Labour productivity growth may be boosted by larger investments in and better use of ICT. The role of the government is mainly to facilitate the diffusion of ICT and other innovations across the economy, because these are the engines of economic growth. Based on studies for the US, one of the most efficient policy options seems to be creating a more competitive environment, which will cause firms to increase efficiency and to explore new ways of doing business.