Information Age: News, analysis & insight for IT & business leaders

With all those promises from suppliers about how technology can improve productivity, one might be forgiven for thinking that people in the industry would be among the most productive on the planet. Think again. A recent survey by Plimsoll Publishing found that software companies are among the least productive businesses in the UK.

Perhaps they have fallen foul of that controversial notion - the supposed link between productivity growth and IT investment. A paper by a Harvard economist, Dale Jorgenson, is now challenging the conventional wisdom that European companies are less effective than their American counterparts because they spend less on IT. There may be a gap in productivity (as measured by GDP), he says, but its size is at least partly a reflection of different accounting conventions on either side of the Atlantic.

In the US, companies count IT spending as investment, which contributes to GDP, whereas European companies usually recognise it as a current business expense. On that basis, he found that in Europe IT contributes more to productivity than is assumed, and that GDP itself has grown by a bigger margin than is re-flected in official statistics.