Why the US and EU are failing to set information free

Susan Ariel Aaronson, 14 July 2014

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Tim Berners-Lee, the architect of the World Wide Web, taught us that the internet we have is a function of the choices we (users, companies, policymakers, etc.) make about information flows. For example, in 1995, Berners-Lee chose not to patent his work on the World Wide Web because he feared patenting it could limit its universality and openness. He continues to advocate this.

Topics: EU policies, Global governance, International trade
Tags: data protection, EU, free trade agreements, Human rights, Information, information technology, internet, national security, privacy, technology, trade, US, WTO

Did the internet prevent all invention from moving to one place?

Chris Forman, Avi Goldfarb, Shane Greenstein, 23 May 2014

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Reading the technology press, it often seems as if the media think all high-tech invention happens in Silicon Valley. This parochial viewpoint highlights the ‘agglomeration’ advantages that the Valley provides to inventors because so many technology firms are located in the same place.

Topics: Frontiers of economic research, Productivity and Innovation
Tags: agglomeration, economic geography, information technology, internet, invention, patents, technology

Riots, revolutions, democratisation, and information cascades

Chris Ellis, John Fender, 26 October 2011

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Major world events, such as the Arab Spring of 2011, the fall of communism just over 20 years ago in Eastern Europe and the Soviet Union, and the financial crisis of 2007-09, sometimes come as a complete surprise to almost everyone. It is of course important to try to understand such events, but it is sometimes not easy to know how even to begin to analyse them.

Topics: Politics and economics, Productivity and Innovation
Tags: Arab Spring, Behavioural economics, information technology, London riots, revolution, riots, social networking

A brief look of the economics of open source software

Neil Gandal, 15 September 2011

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The open source model is a form of software development in which the source code is made available, free of charge, to all interested parties; further users have the right to modify and extend the program.Open source software methods rely on developers who reveal the source code under an open source licence.

Topics: Frontiers of economic research, Productivity and Innovation
Tags: information technology, intellectual property, Open source

Information technology and economic change: The impact of the printing press

Jeremiah Dittmar, 11 February 2011

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Topics: Development, Poverty and income inequality
Tags: economic history, information technology, printing press

Information technology and economic change: the impact of the printing press

Jeremiah Dittmar interviewed by Romesh Vaitilingam, 1 Oct 2010

The movable type printing press was the great innovation in early modern information technology, but until now, little evidence has been found of an impact on growth. Jeremiah Dittmar of American University in Washington, DC, talks to Romesh Vaitilingam about his research, which seems to resolve this precursor of the Solow paradox. The interview was recorded at the annual congress of the European Economic Association in Glasgow in August 2010.

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See Also

See also further research by Dittmar.

Transcript

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Romesh Vaitilingam interviews Jeremiah Dittmar for Vox

October 2010

Transcription of an VoxEU audio interview [http://www.voxeu.org/index.php?q=node/5586]

Romesh Vaitilingam: Welcome to Vox Talks, a series of audio interviews with leading economists from around the world. My name is Romesh Vaitilingam, and today's interview is with Jeremiah Dittmar from American University in Washington, DC. Jeremiah and I met at the European Economic Association's annual meetings in Glasgow in August 2010, where we spoke about his research on the impact of the movable type printing press on growth in early modern Europe.

Jeremiah Dittmar: The research is about the great revolution in early modern or Renaissance information technology, which is the movable type printing press, most closely associated with the name of Gutenberg. So what we should have in mind here is a really grand transformation. We go from a world in which the leading technology for the storage and dissemination of ideas on paper is the pen, to one in which we have a machine that allows for the very productive and efficient generation of texts and reproduction of texts. So historians who have looked at the printing press suggest it's an innovation with world historical importance, that it radically transformed the ways ideas could be transmitted, exchanged, and revolutionized the intellectual life of Europe. The economists who have looked have struggled to find any impact of the printing press in macroeconomic data, so income per person, productivity and the like. And so we have something like the Solow productivity paradox: a grand revolution in information technology, and economists scratching their heads wondering where it is in macro aggregates.

So my work looks at the technology from a new angle. It assembles a new data set of the cities that adopted printing over the infant industry period. And the key finding is that cities that adopted printing in the late 1400s weren't growing especially quickly prior to adoption but that, subsequently, they grew far, far faster than cities that were otherwise similar but didn't have printing presses. And the sort of estimates that I present suggest that printing accounted for, at the very least, something like 20 percent of city growth over the period 1500 to 1600.

Romesh: Can you tell me a little bit more about how the data was brought together, how you were able to collect this data on where the printing presses were, where they made an impact, how they grew?

Jeremiah: So this work puts together data from a few different sources. The key source for the location of the printing presses is a catalog that the British Library maintains called the Incunabula Short Title Catalogue. So this catalog records the universe of known books produced over the infant industry period. So there's something just above 20,000 books. And we have, for almost all of them, the location at which they were printed. And from this catalog, we can determine which cities had printing presses by which dates. The data on the city populations is largely drawn from the work of Paul Bairoch. He put together what's probably, along with the work by Jan DeVries, the leading database on the populations of European cities.

Romesh: Over what kind of time period are we talking about this impact happening? One of the issues discussed around the computer revolution and the Solow question, well, people's response was, "It's going to take a while before we see this in the figures." Similarly with other industries, communications, technologies like the telegraph, I think people looked at the impact of that, and similarly with electricity, steam, these kind of things. What was the period over which the printing press was having this impact?

Jeremiah: That's quite right. And the sort of macro impact is detected over these longer time frames. The work by Joel Mokyr says there is a big macro impact, but on his argument, it shows up only several centuries later. He identifies the sort of intellectual changes of what he calls an "industrial enlightenment" as setting the stage for, ultimately, the Industrial Revolution. What I'm identifying are changes, at the level of the city, much earlier. So the printing press is adopted 1470, 1480, 1490, in different cities, and already, from 1500 to 1600, we're seeing big effects at the city level on city growth. The argument in my paper is that cities that got this technology experienced really important localized spillovers. So these were spillovers in the accumulation of human capital, in innovations in business practice. Now, we're not talking in industrial sectors so much as in commercial practice, in bookkeeping, in numeracy, in the development of all sorts of technologies that merchants employed.

In addition, the printing press encouraged all sorts of new interactions between people. So it allowed ideas to be transmitted over distance, but it also, crucially, promoted new interactions, face to face, around the printing press and in those cities. So printing presses themselves were places where the preexisting division between scholars and businesspeople started to erode. So the work by Elizabeth Eisenstein, in particular, is very sharp on identifying this erosion of a town gown divide.

Just sort of anecdotally, if you look at what's going on in Silicon Valley in the United States, or in Cambridge, Massachusetts, you have all sorts of entrepreneurial activity that draws on this sort of interface between academic learning and entrepreneurial profit seeking so biotech in Cambridge near MIT, all the sort of IT stuff that's going on on the peninsula below Stanford.

And so this paper is speaking about something that's at least roughly analogous, that's happening at the local level in the pre industrial era. And what we're seeing is that there really are very big and important changes in pre industrial European capitalism. So one stock version of world economic history is, essentially, we're trapped in a Malthusian world until 1800, then you get the Industrial Revolution and, voila, there's a takeoff. And so what this work is starting to unpack are a set of changes that predate the Industrial Revolution that are happening during the Renaissance, when profit seeking is driving important intellectual and commercial changes.

Romesh: The impacts seem to be very much at a local level. You're looking at particular growth in cities, and I'm presuming you're making a comparison with cities that were early adopters versus cities that were later adopters, and the early adopters are benefiting from them earlier. But isn't the printing press, in some way, like the computer? It's connecting people at distance. You can write something. You can produce multiple copies. You can disseminate it, not just around the city but around the country, around Europe. How does that interaction work?

Jeremiah: This is, for me, one of the more interesting and exciting dimensions of the history, because it speaks to some of our contemporary questions. So, today there is a discourse, in economics and other social sciences, and even in the popular press, heralding the death of distance. So the Internet is going to make the importance of location diminish. Why be in New York City when you could be in Omaha, Nebraska, or in Bangalore?

Now, the contemporaries of Gutenberg actually develop a somewhat similar discussion. There are many among them who start to look forward to a future in which location's importance is eroded, and for precisely the reasons that you've just suggested, because it's easy and relatively cheaper to transmit information over distance. And what my study finds is something to the contrary, that rather than eroding the importance of location, this technology seems to be associated with a persistence in the importance of location, that, partly because of the cost of transport, it really mattered whether you were in a city with a printing press as opposed to a city without.

But also, one of the reasons why cities with printing presses experienced this unusual dynamism was that there are all sorts of new interactions. I find sometimes audiences can sort of sink their teeth into the Silicon Valley example, that these entrepreneurs in northern California are devising technologies that allow us to communicate with our families overseas, with friends who live at great distances from ourselves, and with business collaborators who live great distances from ourselves. And yet there's something about this cluster of innovative activity, where they profit and benefit from interacting with each other.

It is not by accident that this activity clusters up. And we're finding something very similar with the printing press, that it doesn't erode the importance of location. If anything, it contributes to it.

Romesh: Are there some differences there, though, between, if you like, the producers of the communications technology, whether it's the printing press or modern day computer technology, and the users of it? Because as you say, you mention Silicon Valley, but Silicon Valley is a cluster because it's in that particular industry. And yet there are many users and beneficiaries of the computer technology in all sorts of other industries and, indeed, in homes.

Jeremiah: This is quite true. And while it's always tempting to draw the analogies between these two revolutions in information technology, there are some limits to how far we can push these. One of the crucial aspects of my research, in terms of the empirical strategy, is that over this infant industry period, the diffusion of the technology is constrained on the supply side. So it's not that Gutenberg is producing printing presses that he is then exporting. People who have access to the secrets of the printing press and they were trade secrets those people are very careful to, as best they can, guard their intellectual property. So over this original infant industry period, the technology itself is restricted, and then what diffuses are its products: the printed texts that contain information and ideas.

Romesh: One thing that people have noted, I guess, since the Solow paradox appeared to be resolved, was that certain countries were cleverer in the way they adopted the new technology than others. Some people have said American businesses were quicker to reorganize themselves around IT than, say, European business, and therefore they've reaped the productivity benefits earlier. Was there a similar sort of story, do you think, going on with the printing press?

Jeremiah: Yeah, so there certainly is, although, as yet, it remains to be fully pinned down. To begin with, some countries adopted it sooner simply because they were closer to the source. They were closer to where Gutenberg worked. So there was a large number of German cities that were printing centers. Printing also was adopted widely in the low countries and in Italy. But what my work, first and foremost, identifies is, essentially, an effect that is a within country effect. So, although more Italian cities adopted printing than Spanish, the sorts of things that my current research has shown is that within countries, cities that adopted printing presses grew quicker than other cities in the same country that did not.

Now, one of the things that's really interesting is not so much the differences across countries, but differences in the sorts of cities. So, historically, port cities were cities that had access to cheap transport, waterborne transport. And what we find is that while printers didn't seek out port cities, and likely didn't anticipate the full consequences of setting up their enterprises there, it was in port cities that the production of print media that addressed concerns for merchants especially flowered. And these port cities contributed a great deal to subsequent urban growth, and it ties into the broader story of economic change that's been identified by people like Daron Acemoglu and his coauthors in the work on Atlantic trade and the rise of European cities.

Romesh: How do you think this medieval information technology interacted with education? That's an issue we think about nowadays, about whether IT creates growth and whether people need to be educated in order to be effective users of it. What were the kind of interactions you see from your analysis with the education? Did it encourage people to learn? Did it spread the word? Or did it require a more educated city, as it were, to be able to use the technology more effectively?

Jeremiah: So we certainly see printers drawn to more educated cities. Our best estimates of literacy are not wonderful estimates, but we know that printers were drawn to cities with universities, institutions of higher education and the like. But what we find is that cities with universities that get printing presses do not have any special advantage over other cities that also get printing presses. So while universities tend to draw printing presses, the interaction between the presence of these institutions and the printing press does not seem to be what drives their subsequent growth. Now, we certainly see the printing press contributing to the accumulation of human capital, education, and the like on a number of different fronts. So one of the areas that I find particularly interesting and exciting is that they disseminated not just literacy but all sorts of new mathematical knowledge that was useful, specifically in business.

This is the era when we see the diffusion of what's called a commercial arithmetic. So these are the first printed math textbooks, and they are textbooks for business education. So this was an era when only men were going to be merchants, and these books were used in the education of young men who were going to join family or other businesses. And essentially, they work the students through problem sets that deal with computing exchange rates, interest rates, profit shares and partnerships, and things like the rule of 72, which I teach my undergraduates in intermediate macro today.

So these sorts of things show up in a real surge of publications, which are directly targeting the leading sector of what's called the Commercial Revolution. This is the mercantile sector. The Commercial Revolution is, broadly, the explosion in international trade that marks Europe in the centuries precisely preceding the Industrial Revolution.

Romesh: How has your research been received? You're saying that people before thought, "Well, we can't really see any evidence that the printing press made a difference." You're saying, "Here it is. Here is the evidence that the medieval productivity paradox has been resolved."

Jeremiah: I think, in the first instance, it's been received warmly, because economists often like stories that confirm their priors about technological change. So in some sense, it doesn't rock the boat. There are the usual concerns about how well you can identify these effects in very old historical data. My general sense is that this is a really first order innovation and that putting some meat on the story is really valuable. In addition, what this line of research does is it ties economic history into a set of concerns that are really live, both in economic geography and in the study of economic growth.

So we've got a set of research programs that are tugging at the edges of what constitutes macroeconomics and the growth research program. And a number of people are starting to ask us to push a little beyond undifferentiated macro aggregates and think about how economic activity is distributed in space, even within countries, and in particular about the role of cities. Ever since economists had their encounter with Jane Jacobs and her work on the economics of cities, these have been really exciting questions for us. What this research does is it ties cities, geography, economic growth, and history into sort of a package that speaks to some of the big questions at the root of the rise of Europe.

Romesh: And presumably, it's going to tap into policy discussions around growth in the poorest countries in the world. We can talk about giving them mobile phones and computers, but actually, giving them good commercial business textbooks is a good way to go.

Jeremiah: It's entirely conceivable. One of the really interesting conclusions some people draw from the recent flowering of the literature on institutions is that we have these long historical legacies; they weigh like nightmares on the brains of the living. And some people draw sort of lugubrious conclusions from this literature. And at least here we have some evidence that there's some really remarkable plasticity, that big changes can happen quickly. There's at least some, I don't know, positive inspiration to be drawn for the broader development questions. How readily we can transpose this into development policy, we have to be duly cautious, as one ought to be in these cases.

Romesh: Final question, Jeremiah. Where do you go with this line of research? How are you going to be developing your work on this topic?

Jeremiah: So, the big future line of research, for me, is to dig down deeper into precisely the sorts of knowledge that was transmitted, and I've got a research programme looking at the diffusion of ideas that were valuable and transformative for modern business.

Romesh: So let’s come back and talk about that another day. Thanks very much.

Jeremiah: Thank you.

Topics: Development, Productivity and Innovation
Tags: growth, information technology, innovation

The economics of cloud computing

Federico Etro, 25 February 2010

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The new big thing of the IT world is “cloud computing”, a general purpose technology that could provide a fundamental contribution to promote efficiency in the private and public sectors and promote growth, competition, and business creation.

Topics: Productivity and Innovation
Tags: Cloud computing, general purpose technology, information technology

US-owned firms better placed to take advantage of IT developments

Nicholas Bloom, Raffaella Sadun, John Van Reenen, 13 May 2007

The US has experienced a sustained increase in productivity growth since the mid-1990s which has not been mirrored in Europe.

Journalists are entitled to free DP downloads on request; please contact pressoffice@cepr.org. To learn more about subscribing to CEPR's Discussion Paper Series, please visit the CEPR website.

URL: http://www.cepr.org/pubs/new-dps/dplist.asp?dpno=6291.asp
Topics: Productivity and Innovation
Tags: information technology, multinationals, productivity

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