13°Conferenza Nazionale di Statistica 4-5-6- luglio 2018 ORANGE 1 – FUTURO Centro Congressi Ergife Via Aurelia 619 Roma

1. HOW TO REACH THE PRODUCTVITY BENEFITS
FROM THE DIGITAL TRANSFORMATION?
Rome, 5 July 2018
Chiara Criscuolo, OECD Science Technology and Innovation Directorate
Productivity and Business Dynamics Division (STI/PBD)
chiara.criscuolo@oecd.org
XIII Conferenza Nazionale di Statistica

2. 1
Compared to other 10 EU countries Italy: in manufacturing…
a) The Italian medium- and large-sized enterprises are more
productive than the ones from other EU countries
b) The units with less than 50 persons employed are less
productive than the EU average.
c) However, micro- and small-sized account for 97% of firms
with dependent workers and 56% of overall employment

3. 2
a) Large firms are more productive than the other EU
countries average (but they account for just 0.05% of the
total and 19% of total employment).
b) Almost all firms have less than 10 persons employed,
and these are less productive than other other Eu
countries average.
…and in services…

4. Differences in real income per capita growth reflect differences in
labour productivity growth
GDP (real) per capita growth and labour productivity growth - Years 2000-2014 (% changes)
Source: Oecd.stat
EE
FR
DE
GR
IT
KR
PL
PT
SK
ES
UK
US
OECD
R² = 0.8363
-20
-10
0
10
20
30
40
50
60
70
80
-10 0 10 20 30 40 50 60 70 80
GDP(real)percapitagrowth
Labour productivity growth

5. Significant slowdown in productivity performance with some differences across
countries

6. The digital transformation is happening across
different industries and along several dimensions
Source: OECD, OECD Science, Technology and Industry Scoreboard 2017, OECD Publishing, Paris.
Agriculture -1.2 -1.1 -1.0 -0.7 -0.8 -0.4
Mining -1.1 -1.1 0.1 -0.4 -0.7 -0.3
Food products -0.5 -0.7 -0.8 -0.5 -0.1 2.6 -0.3
Chemicals -0.6 -0.6 -0.5 -0.3 -0.5 0.6 0.0
Pharmaceuticals -0.7 -0.7 -0.5 -0.3 -0.5 0.6 0.0
Basic metals -0.4 -0.6 -0.3 -0.4 0.3 -0.2 -0.3
Computers and electronics 0.0 -0.8 0.2 0.8 0.0 0.9
Electrical equipment -0.2 -0.6 -0.2 0.8 0.6 -0.1
Machinery -0.1 -0.2 -0.3 -0.1 0.6 -0.2
Transport equipment -0.4 -0.6 -0.1 3.3 1.8 0.0
Electricity, gas and steam -0.8 -0.6 -0.8 -0.3 -0.8 -0.2 -0.1
Construction -0.6 -0.1 0.2 -0.6 -0.8 -1.6 -0.4
Wholesale and retail 0.6 0.4 0.0 -0.1 0.2 -0.3
Transport services -0.7 -0.6 -0.8 -0.4 1.3 -0.3
Hotels and food services -0.6 0.0 -0.8 -0.5 -0.2 -0.4
Publishing and broadcasting 1.5 1.3 -0.3 0.0 -0.3 -0.2
Telecommunications 0.9 3.4 3.5 0.9 1.0 0.0
IT services 2.5 2.2 1.1 5.4 -0.9 5.7
Finance and insurance 2.9 1.5 -0.6 0.9 0.3
Real estate -0.9 -0.8 -1.2 -0.7 -1.4 -0.3
Law and accountancy services 1.8 1.2 0.5 0.4 -1.3 -0.2
Public admin and defense -0.5 -0.7 0.1 0.3 0.0
Education -0.4 -0.4 -0.8 -0.3 -0.2
Health services -0.6 0.1 0.2 -0.5 -0.3
Online sales
revenue
ICT
specialists
Software
investment
ICT tangible
investment
Intermediate
ICT goods
Intermediate
ICT services
Robot use
Bottom 2nd quartile 3rd quartile Top quartile Not available
Taxonomy of sectors by quartile of digital intensity, 2013-15

7. T-Optimists:
• Brynjolfsson
• McAfee
• Mokyr
• Jovanovic
• …
A spirited debate on the future of productivity
T-Pessimists:
• Gordon
• Cowen
• Thiel
• …

8. OECD work shows that the world’s most productive firms still
manage rapid productivity growth …
Average of labour productivity across each 2-digit sector (log, 2001=0)
Source: Andrews, Criscuolo and Gal, 2017

9. …especially in ICT services
The productivity gap between the globally most productive firms and other firms has widened
Source: Andrews, Criscuolo and Gal, 2017

10. The Case of Italy: the performance has been getting worse
• In Manufacturing, this occurred especially among more productive firms
• In market services, on the contrary, the productivity decreased to a larger
extent among the less productive firms, further widening the
performance gap.
Suc

11. • In Manufacturing, a general salary reduction in 2001-2012 can be noted in
all productivity quantile, for most productive firms with higher fluctuations
• In market services the salary trend is always better for most productive
firms, even though since 2010 the gap has been shrinking
…and this has implication for real wages

12. What can explain the paradox ..and the Italian performance?
A new version of Solow’s (1987) productivity paradox? Why do we see
computers everywhere, but not (yet) in the productivity statistics?
We find that two factors play an important role:
• Lack of diffusion of technology, innovation and related business
models
• Worsening of the process of creative destruction and reallocation of
resources
• Lack of structural change, a slowdown in business dynamics and possible impacts of
competition

13. While most firms are connected, few make use of the most
advanced ICT …
12Source: OECD Science, Technology and Industry Scoreboard 2017,
Diffusion of selected ICT tools and activities in enterprises, by technology, 2016
As a percentage of enterprises with ten or more persons employed

14. …especially amongst SMEs
13
Enterprises engaged in sales via e-commerce, by size, 2015
As a percentage of enterprises in each employment size class
Source: OECD Science, Technology and Industry Scoreboard 2017,

15. … and SMEs are often lagging, even in technologies well suited to
them
Enterprises using cloud computing services, by firm size, 2016
As a percentage of enterprises in each employment size class
Source: OECD Digital Economy Outlook 2017, StatLink: http://dx.doi.org/10.1787/888933585495
0
20
40
60
80
100
% All enterprises 10-49 250+

16. … and SMEs are often lagging, even in technologies well suited to
them
Management score
Notes: The overall management score is an average of responses to 18 survey questions that are designed to reveal the extent to which firms: i) monitor what goes
on inside the firm and use this information for continuous improvement ii) set targets and track outcomes; and (iii) effectively utilise incentive structures (e.g.
promote and rewarding employees based on performance). The estimates in the right panel are calculated from the difference in management score between
each country and the United States and the estimated coefficient on the management score term in a firm level regression of sales on management scores,
capital and employment. The sample is based on medium-sized firms, ranging from 50 to 10 000 employees.
Source: OECD calculations based on the management scores and estimated coefficients in Bloom et al., (2012a).

17. 16
In Italy the allocation of resources is not efficient and has been getting
worse since 2001
In fact, the productivity gains obtainable if the allocative efficiency had been kept at 2001
levels are higher both in Manufacturing (12% in 2012) and especially in services (56% nel
2012)  Resource misallocation has been worsening especially in services

18. 17
Efficienza allocativa del lavoro (Distribuzione della distanza del lavoro dal suo livello efficiente)
• The vast majority of Italian firms is undersized (perfect efficiency situation: all firms concentrated on zero)
• In 2001-2012 the dispersion (misallocation) has worsened, mostly in Services grown, where the number of undersized firms
has increased
MANIFATTURA - 2001
MANIFATTURA - 2012
SERVIZI - 2001
SERVIZI - 2012
Densità
Densità
Densità
Densità

19. The diffusion of digital technologies also depends on the scaling of
young innovative firms
Average size of start-ups and old firms, in persons employed, services sector
Source: OECD calculations based on DynEmp v.2 and DynEmp3 databases www.oecd.org/sti/dynemp.htm

20. Our findings on how to benfit from productivity …
• The diffusion of advanced digital technologies (e.g. big data, robotics, AI) in
OECD countries is still underway – it will take time, especially for SMEs, and
in many sectors.
• It’s not only about technology diffusion – changes in organisations,
business models, worker‘s skills and processes take even more time (and
may be more difficult for many firms).
• The impacts of digital technologies will also require more structural change
within & across industries, as digitally-intensive firms grow and less
digitally-intensive firms decline.
• The slowdown in business dynamism and a slow pace of structural reform
also limits the impacts of digital technologies

21. … and policies that may be appropriate
• The good news: the impacts of digital transformation are likely still to come
• Policy can help in several ways to strengthen these impacts, by:
• Fostering investment in tangible and intangible capital
• Strengthening diffusion of technologies, practices and business models
• Improving skills of workers and management and dealing with skills mismatch
• Improving allocation of resources
• Strengthening entrepreneurship and the scaling of firms
• Facilitating structural change – where certain sectors may require more policy
attention
• Ensuring good regulation and sound competition.
• Fostering innovation across the economy
• Note also: Improving measurement is important

22. Thank you
21 21
Contacts: chiara.criscuolo@oecd.org
Twitter: @OECDinnovation; @OECDeconomics
OECD Going Digital website:
http://oe.cd/goingdigital
OECD MultiProd and DynEmp: http://www.oecd.org/fr/sti/dynemp.htm
OECD Global Forum on Productivity: http://www.oecd.org/global-forum-
productivity

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