The ICT Sector,Growth and Productivity: Ireland and Australia Compared

Abstract

This article compares the productivity and employment performance of the Australian and Irish economies over the 1990s, with particular emphasis on the different approaches to the role of information and communications technologies (ICT). Whereas Australia's performance is characterised by the application and diffusion of ICT across a number of sectors, with indirect productivity and employment effects, Ireland has become a major producer of ICT products and services in its own right. The article traces the implications of these approaches for the pattern of growth and employment in both economies and also indicates their limitations. Ireland's approach is limited by dependence on foreign investment, embodying externally generated technologies, though this is now being addressed by a policy interest in R&D support and the development of industry clusters and networks. On the other hand, Australia faces growing and possibly unsustainable deficits in its current account, driven by imports of knowledge-intensive goods and services, notwithstanding recent improvements in the terms of trade associated with higher prices for primary commodity exports.