National Productivity Week 27th November 2023 | Visit Website

A diverse community of
leading experts, policymakers
and practitioners

The Institute’s key research themes
are led by ten academic partners
spread across the UK.

Businesses are crucial to solving
the UK’s productivity problems.

We’re a UK-wide research
organisation exploring what
productivity means for business

Businesses are crucial to solving
the UK’s productivity problems.

Enterprise Information and Communications Technology Software Pricing and Developer Productivity Measurement

The 1999 addition of business sector software and services spending was an important National Income and Product Accounts innovation, achieving a novel focus on the measurement of intangible asset investment. Over the intervening years, enterprise information and communication technology (ICT) has fundamentally changed. As a software producing sector, the business sector ICT function now has a much wider array of choices – software-as-a-service; open-source software; computing, storage, and communications cloud services; and developer services from a range of global resources. Labor and multifactor software development productivity are important sources of value creation, making measurement challenging. As the software development sector has become increasingly important in providing business sector ICT productivity, software sector developer productivity has become a viable proxy for business sector ICT developer productivity. With the use of a two-sector model and a standard growth accounting framework, the business sector ICT function shadow price is estimated, finding software price declines have been underestimated by 6.0 percentage points (ppt) over 2015 to 2020. The impact on GDP growth is a 0.1 ppt underestimate and the impact increases software spending from 19.1% to 24.9% of  nonresidential fixed investment.