The background to this report is that the increased importance of ICT in driving Swedish productivity growth has to some extent overturned Robert Solow’s paradox “that computers were found everywhere except the productivity statistics”. However, the growing number of studies and often seemingly contradictory results make it hard to keep track of the state of evidence. In order to evaluate the evidence base, Swedish policymakers requested additional analysis.

Measurement issues are of big importance to ICT studies. A major puzzle is why the measurement agenda is still struggling with different views about the basic assumptions. Datasets such as the EU-KLEMS and the Swedish national accounts are based on different calculations assumptions and, therefore, produce very different results. Policymakers need guidance in order to choose appropriate evidence, which holds up to scrutiny, as well as analysis of how the results can guide them in the selection and shaping of political alternatives.

Sweden was an early adopter of comprehensive broadband penetration and has a large number of advanced users. This infrastructure is a good steppingstone towards growth but it is not necessarily a growth driver in its own.

The digitalisation process was introduced early in the Swedish private sector. The Swedish Agency for Growth Policy Analysis presents new data that shows that the contribution of the ICT-sector and the ICT-investments between 1995–2005 amounted to 32 per cent of the total productivity growth of the Swedish economy.

Despite economic development fluctuations, the impact and importance of the digitalisation process has increased in the economy. New calculations by Growth Policy Analysis indicate that between the years 2006–2013 the ICT contribution to the economy has grown larger. During the same period the ICT-sector and the ICT-investments in the entire Swedish economy contributed 42 per cent to the total productivity growth.

However, the big growth-potential is yet to be realised, when whole private sector reaps the benefits of the digitalisation process. All sectors invest in new technology but so far, almost exclusively the ICT-sector is showing productivity gains. The new data demonstrate that it is the ICT-sector that displays these productivity gains during the period 1995–2013. The contribution from all other sectors is negligible.

This productivity growth, which the ICT-sector is generating, is geographically linked to Stockholm, where the ICT sector is mainly located. The new calculations, done by Growth Policy Analysis, show that between 1995–2005 Stockholm accounted for 50 percent of the productivity growth. A change occurs between 2006–2013 and the contribution for Upper Norrland and Eastern Central Sweden is now noticeable.

Company IT-investments are not solely responsible for growth. New studies show that new technologies need to be complemented by e.g.: organisational changes, staff education, in order for the new technologies to be implemented successfully. Because a number of factors concur to create productivity growth, it can take some time before the results become evident.

Digitalisation transforms the economy and the primary beneficiaries will be those who adapt their capabilities and assets and fully exploit the potential of new technologies. The new evidence presented here suggests that Swedish policymakers, who, for years, have focused on ensuring infrastructure and matters close to the state, now need to adopt a broader perspective that highlight the use of ICT throughout the economy.

A good case can also be made that the policy-making process needs to take on board both a strong ICT sector as well as the big growth potential that arise when all of the private sector reaps the benefits of the digitalisation process.

Finally, the evidence presented in this report supports the view that ICT reaches far beyond matters close to the state and highlight the need to accommodate ICT in other relevant policies e.g. industrial policy, innovation policy, trade policy and research policy.