Value added is a useful concept in input/output analysis of the firm; it simply means the value of the output less the value of the input (or intermediate consumption); its usuefulness comes mainly in calculating such aggregates as the GDP. Excluding intermediate consumption and considering only the added value prevents multiple counting of the same value passing through different production/distribution stages.
>From that standpoint, computer hardware may not contribute much value to
the GDP in the US, but its contribution to the GDP is probably much higher
in countries where it is actually manufactured, e.g. Taiwan, Malayasia,
Mexico(?) etc.
>
>The fact is that almost all comparative historical data on technology is
>nearly useless, since what was measured then and what is measured now are
>nearly impossible to correlate. Things that were part of one category in
>the past are part of another today, and vise versa.
I think it is a sweeping generalization. True, definitions change over time and that makes comparative work difficult, but not impossible.
>There is the old joke that computers have shown up everywhere except in the
>productivity statistics. There is the argument that computerization has
>done nothing for productivity and that explains the problem. The other
>explanation, and the one I have a lot of sympathy for, is that traditional
>government measures of productivity suffer from a combination of outdated
>methodology and underfunding at the agencies themselves to update things.
Productivity of what? I think it is a more conceptual than measurement issue. A worker armed with a computer is certainly more productive than one without a computer. But that does not translate into a greater productivity of an aggregate, such as the firm. In addition to productive workers, such aggregates also consist of people who are not productive - such as various supervisors, consultants, executives, redundant workers, etc. Their 'employment' (like owership of the means of production) is merely a scheme of appropriating the value produced by the worker.
However, this error is systematic since all firms have some "slack" - it thus affects the productivity measures in the same direction (by lowering it). Consequently, while the absolute value of productivity may be distorted, we can still compare changes in productivity levels between two different points in time.
The table below illustrates that point by comparing productvity in manufacturing (measured as the manufacturing share of the GDP in constant dollars divided by the total number of "manhours" in manufacturing) in 1980 vs 1987 in the US and Sweden.
US 1980 1987 % increase manufacturing share of GDP1) 586,438 742,670 employment in manufacturing2) 38,446 36,710.0 "value added" per "manhour" 15.3 20.2 33%
Sweden manufacturing share of GDP3) 154,383 193,550 employment in manufacturing2) 1,453.7 1,423.1 "value added" per "manhour" 106 136 28%
ca$13 ca$17
1) millions of constant 1980 dollars 2) millions of "manhours" 3) millions of constant 1985 kronor Source: OECD National Accounts
>There are a number of ways to explain economic growth in the US versus
>problems in other countries, but the acceleration of technology in this
>country seems to be one of the most plausible explanations, making a
>dismissal of its role a bit too easy.
I agree. I think the table I included above is consistent with that explanation.
regards,
Wojtek