Do Capital Incentives Distort Technology Diffusion? Evidence on Cloud, Big Data and AI
The arrival of cloud computing provides firms a new way to access digital technologies as digital services. Yet, capital incentive policies present in every OECD country are still targeted towards investments in information technology (IT) capital. If cloud services are partial substitutes for IT investments, the presence of capital incentive policies by unintentionally discourage the adoption of cloud and technologies that rely on the cloud, such as artificial intelligence (AI) and big data analytics. This paper exploits a tax incentive in the UK for capital investment as a quasi-natural experiment to examine the impact on firm adoption of loud computing, big data analytics and AI. The empirical results find that the policy increased investment in IT capital as would be expected; but it slowed firm adoption of cloud, big data and AI. Matched employer-employee data shows that the policy also led firms to reduce their demand for workers that perform data analytics, but not other types of workers
| Main Authors: | , , , |
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| Format: | Working Paper biblioteca |
| Language: | English en_US |
| Published: |
Washington, DC: World Bank
2024-09-19
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| Subjects: | CAPITAL INCENTIVES, FIRMS, CLOUD COMPUTING, ARTIFICIAL INTELLIGENCE, LABOR FORCE, HUMAN CAPITAL, TECHNOLOGICAL CHANGE, DECENT WORK AND ECONOMIC GROWTH, SDG 8, INDUSTRY, INNOVATION AND INFRASTRUCTURE, SDG 9, |
| Online Access: | http://documents.worldbank.org/curated/en/099404009172440311/IDU1bad42116190e21475a1a4481b0ecfdc4e2eb https://hdl.handle.net/10986/42166 |
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| Summary: | The arrival of cloud computing provides firms a new way to access digital technologies as digital services. Yet, capital incentive policies present in every OECD country are still targeted towards investments in information technology (IT) capital. If cloud services are partial substitutes for IT investments, the presence of capital incentive policies by unintentionally discourage the adoption of cloud and technologies that rely on the cloud, such as artificial intelligence (AI) and big data analytics. This paper exploits a tax incentive in the UK for capital investment as a quasi-natural experiment to examine the impact on firm adoption of loud computing, big data analytics and AI. The empirical results find that the policy increased investment in IT capital as would be expected; but it slowed firm adoption of cloud, big data and AI. Matched employer-employee data shows that the policy also led firms to reduce their demand for workers that perform data analytics, but not other types of workers |
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