The Solow computer paradox is that the productivity of the work force has not risen as information technology has extended through Western world industry.

In 1987 Solow observed: : You can see the computer age everywhere but in the productivity statistics.

It was widely believed that office automation was boosting labour (economics) (or total factor) productivity, but the growth accounting didn t seem to confirm the idea, because the computer-era from the early 1970s to the time he was writing included a massive slow-down in growth as the machines were becoming ubiquitous. (Other variables in country s economies were changing simultaneously, growth accounting separates out the improvement in production output using the same capital and labour resources as input by calculating a Solow residual .)

The computer industry s response to the paradox was to say that computers actually would improve productivity, and that investment in more information technology would be a path to growth, based on two arguments: # There may be a lag in productivity improvements (the idea was that the economy would need to adapt before the capital investment in computerized automation would pay off). In 1990 the economist Paul David made an analogy from the modern PC to the introduction of the electric motor after its 1880 invention; the payoff from the new technology was not measured in economic statistics in the interval starting 1913. (This would suggest a lag of at least thirty years before production can fully utilize IT advantages, but by 1990 the acceleration in growth might have been detectable on this timescale.) # The productivity growth produced from IT may already be occurring, but a flaw in the measurement tools available are hiding it.

Another answer, from economists Stephen Oliner & Dan Sichel was to deny the significance of the (high-profile) IT-sector; they said that information technology accounted for no more than two percent of the capital stock in any country in the world.

Other economists have made a more .

= See also =