WHAT INFORMATION TECHNOLOGY MEANT FOR ECONOMIC PROSPERITY OF USA, JAPAN AND GERMANY?

Technological progress and economic growth are deep related. It is primarily through technological improvements that humankind has been able to progress to the extent it has since the First Industrial Revolution. Technological advances have displaced existing economic structures and laid down fundaments for new economic forces and opportunities, all of which had a widespread welfare effect. Growth theory indeed assumes that changes in real output and productivity are result of technological shocks within the economy. By focusing on computer and information techonology, using ARIMA models and Beveridge-Nelson univariate decomposition this paper estimates the impact of technological shocks on GDP, GDP per capita and labour productivity growth of three world’s strongest economies: USA, Japan and Germany. The paper confirms the thesis that information technology has been the key factor of improved productivity and growth performance of these economies.