The Economic Impact of Capital-Skill Complementarities in German and US Industries Productivity Growth and the New Economy

US labor productivity in ICT-skill intensive industries experienced tremendousincreases in post–1995 trend growth compared to Germany, while other (non-ICT-skillintensive) industries showed similar growth trends in both countries. Examining thesource of industry productivity growth in German ICT-skill intensive sectors, there is noempirical evidence on the influence of ICT-skill complementarities; rather was productivitygrowth of German Motor Vehicles & Other Transports driven by Non-ICT-skillcomplementarities. In case of the US two ICT-skill intensive sectors, Office Machinery &Electronic Equipment and Motor Vehicles & Other Transport, were found to haveexperienced strong productivity growth via ICT-skill complementarities. These findingsshed light on varying sectoral complementarities between physical and human capitaland show a decisive disparity in the source of German-US productivity differentials inthe goods-producing sector during the New Economy. Such differentials originatedfrom a substantial dissimilarity in production processes as well as from higher ICTintensity and skill endowment in the US.