The benefits of internet innovation are hard to spot in GDP statistics

As economist Robert Solow lamented: 'You can see the computer age everywhere but in the productivity statistics'

Around the world, there is enormous enthusiasm for the type of technological innovation symbolised by Silicon Valley. In this view, America's ingenuity represents its true comparative advantage, which others strive to imitate. But there is a puzzle: it is difficult to detect the benefits of this innovation in GDP statistics.

What is happening today is analogous to developments a few decades ago, early in the era of personal computers. In 1987, economist Robert Solow awarded the Nobel Prize for his pioneering work on growth lamented: "You can see the computer age everywhere but in the productivity statistics." There are several possible explanations for this.