Fact of the Week: ICT-Intensive Firms in Europe Suffered No Productivity Slowdown During the Great Recession While Their Counterparts That Invested Less in ICT Saw Decreases up to 9.5 Percent

April 2, 2018

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In the Great Recession of 2008–2009, economies around the world suffered from massive productivity slowdowns. But while many businesses failed, many others survived—and of those that survived, some emerged in a much better position than their competitors. There are many reasons why certain businesses suffer less during an economic recession. For example, they may operate in industries that provide essential goods and services; they may have organizational structures that respond quickly to economic shocks; or, as scholars with the German Economic Association have found, they may invest more in information and communication technologies (ICT).

These scholars analyzed firm-level economic data covering 7 industries across 12 European Union countries from 2001 to 2010. They found that ICT-intensive firms had no change in productivity during the Great Recession while their non-ICT-intensive counterparts suffered productivity decreases of up to 9.5 percent.