Technology, productivity and innovation

An interesting story on The Economist about the myth that countries with wider spread of new technologies (in this case, broadband) should be more productive than the rest has a few interesting facts:

Paul David, an economist at Oxford University, has shown that electric power, introduced in the 1880s, did not immediately raise productivity. Not until the late 1920s—when around half of America's industrial machinery were finally powered by electricity—did efficiency finally climb.

In 1987 Robert Solow, a Nobel Prize-winning economist, famously said: 'You can see the computer age everywhere but in the productivity statistics.' It was only in 2003 that The Economist felt comfortable boldly proclaiming: 'The 'productivity paradox' has been solved.'

Can the Japanese and Koreans (who finish at the top of OECD's charts) do something at 100Mb/s that the Americans, British and Germans (in the middle tier) can't at 20Mb/s? The idea that “bigger is better broadband” is orthodoxy, not economics. So is its corollary, the neo-Cartesian logic that goes: “Broadband ergo innovation.” But we have yet to see innovation happen at a high speed that couldn't happen at a slower one.

In short, though technology allows innovation, it does not imply it. Kind of obvious, after you realize it, but I think it allows for the interesting insight of understanding there are two ways for innovating, and one of them does not necessarily pass through evolving the infrastructure.