Germany: Bundesbank Monthly Report: The significance of information and communication technology

Advances in information and communication technology (ICT) are closely monitored among the research community and in the economic policy debate. Initial hopes of such technologies creating a 'New Economy' have proved unrealistic, but the question as to whether there is any correlation between contemporary ICT and economic developments is still no less relevant. In Germany, ICT has assumed a significantly greater role over the past few years, in terms of both its production and use. At the same time, the prices of ICT products have slumped, triggering a marked reduction in the user cost of capital. ICT expenditure now constitutes more than 40% of total investment in machinery and equipment, just one reason why its economic impact must not be underestimated. Although the results of studies on the influence of ICT on long-term growth are not clear-cut, particularly in comparison with other countries, there are many indications that ICT could potentially generate a sustained increase in productivity and thus boost longerterm growth