How AI risks repeating the IT productivity paradox
The upcoming roundtable is a chance to learn the lessons from the previous generations’ expensive mistakes. We know the pitfalls and how to avoid them.
“You can see the computer age everywhere but in the productivity statistics.” This now-famous observation by Nobel Prize-winning economist Robert Solow, made in 1987 in response to the so-called IT productivity paradox, captured one of the most perplexing economic puzzles of the late 20th century. Despite billions invested in IT and computers throughout the 1970s and 1980s, no aggregate productivity effects had shown up in national accounts.
Today, artificial intelligence is everywhere, and the world is again investing (many) billions. As Treasurer Jim Chalmers sets out to host an economic reform roundtable focused on rekindling sluggish productivity growth, with AI firmly on the agenda, we had better learn from history.
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Sandra Peter is director of Sydney Executive Plus and associate professor at the University of Sydney Business School.
Kai Riemer is Professor of Information Technology and Organisation and Director of Sydney Executive Plus at the University of Sydney Business School.
