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Measuring and Sustaining the New Economy: Report of a Workshop
FIGURE 3 Relative Prices of Information Technology Outputs, 1960–1998.
A Sudden Point of Inflection in Prices
The first challenge in understanding this change is to integrate economic and technological information, starting with an examination of prices. Dr. Jorgenson affirmed Dr. Cerf’s insight that, “once you commit something to hardware, Moore’s Law kicks in” and showed how quickly the prices of information technology—in terms of computers and computing investments—have declined at a rate basically determined by Moore’s Law. Translated to the portion of computer technology that can be associated with Moore’s Law, this decline would be about 15 percent a year. In 1995, however, the decline in computer prices suddenly doubled in a dramatic “point of inflection” that has only recently been identified.
The Dark Planet
Some of this change could be attributed to improved semiconductor technology, but this abrupt shift seems to be part of a larger trend that reflects important gaps in our information. One of these gaps is an absence of data about communications equipment. Another gap is the role of software, the “dark planet” in our information system. In fact, software investment was not even part of our eco-