Working Paper: NBER ID: w19507
Authors: Shane Greenstein; Frank Nagle
Abstract: Researchers have long hypothesized that spillovers from government, university, and private company R&D contribute to economic growth, but these contributions may be difficult to measure when they take a non-pecuniary form. The growth of networking devices and the Internet in the 1990s and 2000s magnified these challenges, as illustrated by the deployment of the descendent of the NCSA HTTPd server, otherwise known as Apache. This study asks whether this experience could produce measurement issues in standard productivity analysis, specifically, omission and attribution issues, and, if so, whether the magnitude is large enough to matter. The study develops and analyzes a novel data set consisting of a 1% sample of all outward-facing web servers used in the United States. We find that use of Apache potentially accounts for a mismeasurement of somewhere between $2 billion and $12 billion, which equates to between1.3 percent and 8.7 percent of the stock of prepackaged software in private fixed investment in the United States. We argue that these findings point to a large potential undercounting of the rate or return from IT spillovers from the invention of the Internet, and to a large potential undercounting of "digital dark matter" in general.
Keywords: digital dark matter; Apache; economic contribution; spillovers; productivity analysis
JEL Codes: O30; O31; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Use of Apache (L17) | Economic productivity (O49) |
| Mismeasurement of Apache's contributions (C80) | Undercounting of IT spillovers returns (F69) |
| Absence of formal market transactions for Apache (L17) | Omission and attribution errors in productivity analysis (D24) |
| Omission and attribution errors in productivity analysis (D24) | Broader underestimation of economic impact of federally funded R&D (O38) |