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3. A brief review of technological developments
3. A brief review of technological developments
According to the economic growth literature, the long term change in output per worker or per hour (labour productivity) is driven by three broad factors:
- change in the capital-labour ratio (capital deepening),
- changes in economic-institutional factors, and
- technological progress.
Capital deepening and changes in the economic environment will be discussed in the following chapters. This chapter concentrates on the effects of technological progress in services. While the main focus of attention is on advances in ICT, attention will be also given to other technological developments that affected the service industries covered in the productivity analysis. The purpose of the discussion is to provide the reader a better appreciation of technological factors driving productivity growth in services and how technological progress is partly reflected through price indexation in sectoral productivity measures.
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