Analyzing the Impacts of Unobserved National Characteristics on Economic Performance of Information Technology based on a Partial Adjustment Approach With Dynamic and Variable Speed of Adjustment

The long-debated issue of the productivity paradox of information technology has been the subject of academic research for several decades. But the studies have rarely examined the impact of national characteristics on the value of information technology. This paper applies a partial adjustment approach with different speed of adjustment to compare the impacts of unobserved national characteristics on the economic performance of information technology in developed and developing countries, in conjunction with the productivity paradox and the substitutability and complementarity of inputs. The conclusions are as follows. First, the impact of the selected unobserved national characteristics on the speed of adjustment varies in different countries and the speed of adjustment, in turn, affects the performance value of IT. Second, the productivity paradox may exist in a country regardless of whether it has a developed or developing economy, rejecting the notion that the productivity paradox exists only in developing countries, but not in developed countries. Third, the complementary and substitution relationships among traditional capital, traditional labor, and IT capital differ from country to country.