the internet and productivity
Without a doubt, the last few months of uprisings and pro-democracy protests in the Middle East will invigorate arguments about the power of the Internet to fuel democratization. Egypt, in particular, stands out. It’s not clear though how much influence the Internet had in encouraging change in these parts of the world. Was Twitter driving additional protests or would agitators have protested anyway? I just don’t think we know at this point. We need more and better research about the role of the Internet, social media, and other technology in fostering social change.
Research about the impact of the Internet on economic productivity may provide some insight. A recent study by my Northwestern colleague, Shane Greenstein, suggests that the Internet’s influence is unevenly distributed, mainly improving the economic productivity of geographical areas with previously high levels of economic development and technological sophistication. The paper is forthcoming in the American Economic Review. Here’s a bit from the press release on the study:
Out of about 3,000 counties in the U.S., in only 163 did business adoption of Internet technologies correlate with wage and employment growth, the study found. All of these counties had populations above 150,000 and were in the top quarter of income and education levels before 1995….
Why did the Internet make such big waves in these few areas? Greenstein believes the reason was that these areas already had sophisticated companies and the communications infrastructure needed to seize on the Internet’s opportunities. But there are other possibilities. The impact could have been due to a well-known phenomenon called “biased technical change,” which means that new technologies can thrive only in places with skilled workers who know how to use them.
This study provides more evidence that technological benefits disproportionately accrue to those who already have economic and educational advantages (for further evidence see the work of another Northwestern colleague, Eszter Hargittai). Could it be that the Internet has a differential effect on social and political change in more developed countries? Or perhaps, if you take the “biased technical change” argument further, you could expect that activists in countries in which there is already a well-established activist infrastructure will be better able to use the Internet to further their political causes. This would essentially be an extension of resource mobilization theory. The Internet’s usefulness for promoting social and political change may be moderated by the availability of preexisting organizational, social and human resources.
Of course, it’s way too early to tell if this is the case or not. However, with the number of pro-democratic movements on the rise, in the future there may be plenty of data to analyze.
Results like this truly puzzle me. Yes, I can believe that firms have unequal abilities to capitalize on new technology. But many Internet technologies are ubiquitous and relatively easy to use.
Maybe there’s a general lesson. You capture more profits if the technology is new and no one else is using it. Then, as the diffusion occurs, profits are competed away. But that’s not an argument about effiecienty, it’s about profits. A firm can produce more at lower cost, just to have someone copy them and take profits. Does the author distinguish between productivity and profits? If the author uses wages, maybe they are missing the story.
fabiorojas
March 31, 2011 at 1:56 am
[...] the internet and productivity [...]
Daily Links for March 30th | Akkam's Razor
March 31, 2011 at 2:02 am
Following news of the Arab uprisings on the Internet has absolutely ruined my productivity in the past few months.
Benjamin Geer
March 31, 2011 at 1:27 pm
Very interesting post. I would theorize that the internet would have greater effects in authoritarian contexts, where the diffusion of information by other means is more limited by political considerations. So the more relevant variable in this context would be the political environment, rather than economic development. At least that’s the view from my armchair.
Charles Seguin
March 31, 2011 at 3:07 pm
disentangling the effects of social media and pre-exisiting civic capacities is a very tricky question indeed when it comes to explaining the ‘arab spring’. one of the more interesting hypotheses i’ve come across re: new technologies is that they can sometimes work to mitigate ‘preference falsification’ / ‘pluralistic ignorance’ within authoritarian societies – a topic, which timur kuran has been writing about for some time now when trying to account for revolutionary ‘tipping points’. see andrew k. wood’s op-ed on the social media question here:
http://www.nytimes.com/2011/02/02/opinion/02iht-edwoods02.html?_r=2
and charles hirschkind’s short piece on egyptian blogging and the public sphere here:
http://blogs.ssrc.org/tif/2011/02/09/the-road-to-tahrir/
heterophilous
April 1, 2011 at 3:38 am
I agree with heterophilous. The power of new media is to increase access of people to free information in a closed system, and overcoming preference falsification, but they do not replace leadership, boldness, or many other crucial resources.
Although I acknowledge several advantages that new media can bring for movements, I’d make a counter argument here and refer to situations that media may halt a movement: For example I’ve seen many cases that people feel happy with themselves by doing very trivial things as “online activism”, and then feeling that “I’ve done my share”. In movements a major drive that brings passive supporters to streets or other high risk situations is that sometimes they cannot “live up with themselves” by just sitting at home while some others are making sacrifices. New social media sometimes mitigate this internal tension and make some supporters feel that they have done their share, while they have not!
Soroush
April 6, 2011 at 11:55 pm
Thanks for the links heterophilous. I essentially agree with your point, although it’s still not clear to me why the effect of online activism on overcoming pluralistic ignorance would be greater in a society where other activist resources are low as compared to a society with a thriving activist community.
Soroush – excellent point. Someone should do an experiment on this!!
brayden king
April 7, 2011 at 2:38 pm