Estimating the impact of the Internet of Things on productivity in Europe

Héctor Espinoza; Gerhard Kling; Frank McGroarty; Mary O'Mahony; Xenia Ziouvelou

doi:10.1016/j.heliyon.2020.e03935

Estimating the impact of the Internet of Things on productivity in Europe

Heliyon. 2020 May 15;6(5):e03935. doi: 10.1016/j.heliyon.2020.e03935. eCollection 2020 May.

Authors

Héctor Espinoza¹, Gerhard Kling², Frank McGroarty³, Mary O'Mahony⁴, Xenia Ziouvelou³

Affiliations

¹ Centre for Economic Performance, London School of Economics, London, United Kingdom.
² University of Aberdeen, Business School, Aberdeen, United Kingdom.
³ Centre for Digital Finance, University of Southampton, Southampton, United Kingdom.
⁴ King's College London, Business School, London, United Kingdom.

Abstract

The Internet of Things (IoT) refers to interconnected devices and objects that collect and transmit data via the Internet. The IoT is an evolving technology, promising to revolutionise industries, but also demanding far-reaching policy changes (e.g. in terms of data security and privacy), which involve significant resources. This paper reviews the evidence on uptake and the economic impact of the IoT during its early years of inception. It uses a growth accounting framework to evaluate the likely impact of the IoT on productivity. Estimating the effect of new technologies on productivity is an essential step in evaluating the 'economic value-added', justifying resources dedicated to facilitating the adoption of innovations. We find a positive impact of the IoT on productivity, however relatively small, given that the IoT is still at an early stage of development. We present projections on the impact of the IoT under a number of scenarios.

Keywords: Business; Economics; Evaluation of new technology; Growth accounting; Impact; Industry; Information science; Internet of Things; Productivity.