Computer and Information Technology, Firm Growth, and Industrial Restructuring: Evidence from Manufacturing in the People's Republic of China

Abstract

Computer and information technology is considered one of the most powerful engines of modern growth, but more empirical evidence is needed to quantify its impacts. This paper studies the role of computer and information technology in industrial restructuring by observing structural change in the manufacturing sector in the People's Republic of China using a large firm-level data set. Computer and information technology is found to boost changes in industrial structure substantially. This paper also identifies faster and higher-quality growth of firms as the underlying channel through which computer use can improve industrial structure. Firms using computers grow faster, spend more on research and development, and enjoy greater productivity.