The Productivity Paradox

“You can see the computers everywhere but in the productivity statistics” (Solow, 1987).
According to standard measures of labor productivity, until 1995, computers were not enhancing the productivity. Then, as a question in mind, which brings up the paradox’s itself, why did most of the firms prefer to invest more and more in computers and information technologies?
At first glance, it seems that information technology (IT) had an undeniable impact on the U.S. economy. Since two decades, microelectronics has remodeled many services and products, the way of production, and the life-styles of consumers (Attewell, 1994).
Although IT changed lots of our everyday life, a growing number of researches indicated that the information revolution has failed to deliver in one important respect. That is, IT has not improved the productivity of the U.S. economy or U.S. firms.
The computer revolution would appear to have been extremely successful. Computers rapidly diffused across almost all of industries and today, computers are fundamental parts of all enterprises. The next step was expected to be a marked improvement in productivity in the industries that had used computers. Such a productivity increase was necessary because since the late 1960s the productivity of U.S. factories and service industries had been stagnant while that of the nation's international economic competitors had been rising. National Academy of Engineering stated in 1988 that firms in the United States were losing market share, in part because of their higher cost structure (Harris, 1994).
The promises made for IT were usually centered on productivity payoffs. Vendors of the technology assured buyers that the technology would increase productivity by requiring fewer workers to perform a work or by replacing expensive skilled labor by cheaper semiskilled labor.
American industry changed their perspective and increased their investments to unbelievable levels in order to improve their IT...