The new economy and economic growth in Europe and the US

The strong productivity growth observed in the US and Scandinavian countries during the 1990s raises questions about the role of the ICT sector—encompassing computers, telecommunications, and digital services—as a driving force behind high growth in leading OECD nations. Empirical evidence from the US, including a mixed study by McKinsey, suggests it may be premature to fully reject Robert G. Gordon's hypothesis that the acceleration in US output growth is primarily due to cyclical factors and productivity gains in the computer sector, despite potential quality measurement issues. In contrast, research by Stiroh and others posits that ICT generates positive productivity spillovers to other sectors. The debate remains unresolved regarding whether the Old Economy or the New Economy benefits more from the innovation and productivity shifts linked to digital services. Additionally, the growing economic significance of the internet enhances the internationalization of the economy, as more services become tradable, with increasing import competition potentially driving productivity growth. If ICT is indeed pivotal in the new economy, this has significant implications for the differing levels of ICT implementation between Germany and the US.