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Capturing digital progress central to improving measurement of GDP

ONS has yesterday published the first conclusions of a joint project with the Institution of Engineering and Technology (IET) looking at how to improve the measurement of economic output of telecommunications. The project aims to ensure productivity figures capture the large gains in the performance of communication products and service, such as smartphones, over the last 30 years.

Yesterday’s paper concludes that better understanding of technology products, including applying appropriate quality adjustment of these product’s prices, is key to improving GDP and productivity estimates.

ONS Deputy Chief Economist Richard Heys commented: “The challenges of measuring output in the digital sector, as well as rapid growth of the e-economy are key issues. This working group has brought together engineers, economists and statisticians for the first time to bring different perspectives to bear on this topic.”

Professor Will Stewart, IET Vice President, said: “There is a pressing need to update the way we measure output in the service and digital industries of the economy, as well as assessing the impact of the rapid growth of the electronic economy.

“Huge advances over the last 30 years in technologies such as communications and lighting have dramatically changed all our lives and we need to ensure these are captured in published data. GDP and productivity are only two measures of welfare, but the work we are undertaking indicates these measures do not adequately capture progress in quality of life terms and decision makers need to be aware of this.”

Commenting on the work to improve the measurement of technological change, Manchester University Professor and ONS Fellow Diane Coyle said: “Capturing the full extent of technological improvement is key to ensuring we can produce the accurate and reliable productivity figures policy makers need, both in terms of GDP and other measures of welfare gains from technological change.”

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