The internet of things and economic growth in a panel of countries
File(s)
Author(s)
Haskel, J
Goodridge, P
Edquist, H
Type
Working Paper
Abstract
Is the world on the cusp of a fourth industrial revolution driven by technological developments in ICT including artificial intelligence and the Internet of Things (IoT)? This paper focuses on IoT and how it might affect economic growth. We attempt to gauge the potential impact of IoT using: a) early data; and b) longer run estimates of growth accounting parameters based on those observed in a previous wave of the ICT-revolution. We find that: a) according to definitions in the literature, we can consider IoT an innovational complementarity to ICT; b) early data already suggest an economically and statistically significant correlation between IoT connections and TFP, implying that an increase of 10 percentage points in the growth of IoT connections per inhabitant is associated with a 0.23 percentage points increase in TFP growth. We observe growth in IoT connections per inhabitant of 30% pa in our sample, implying a contribution to TFP growth of 0.69% pa, a large effect. This is equivalent to a contribution of $557 billion based on world GDP in 2017. c) longer run estimates of the IoT contribution based on growth-accounting parameters suggest a potential global annual average contribution to growth of 0.01 to 1% pa in 2018-2030, approximately $11–852 bn pa of world GDP in 2018 prices.
Date Issued
2019-09-06
Publisher
Imperial College Business School
Is Replaced By
10044/1/88376
Copyright Statement
© 2019 The Author(s)
Sponsor
Engineering & Physical Science Research Council (E
Economic & Social Research Council (ESRC)
Grant Number
EP/K503733/1
ES/M500562/1
Publication Status
Published