Americans Do I.T. Better: US Multinationals And The Productivity Miracle

The US has experienced a sustained increase in productivity growth since the mid-1990s, particularly in sectors that intensively use Information Technologies (IT). This has not occurred in Europe. If the US "Productivity miracle" is due to a natural advantage of being located in the US then it is not expected to see any evidence of it for US establishments located abroad. This paper shows in fact that US multinationals operating in the UK do have higher productivity than non-US multinationals in the UK, and this is primarily due to the higher productivity of their IT. Furthermore, establishments that are taken over by US multinationals increase the productivity of their IT, whereas observationally identical establishments taken over by non-US multinationals do not.