This new global economy poses new opportunities as well as new challenges to the United States’ growth and competitiveness. To better understand these trends, and the conditions to sustain them, the National Academies’ Committee on Measuring and Sustaining the New Economy held a series of conferences since 2001 covering the semiconductor, computer component, software, and telecommunications sectors. Each of these conferences brought together industry leaders, economists, national accountants, and leading policy analysts to identify the data challenges and policies needed to sustain the advantages of this new technological and economic paradigm. This concluding report presents the Committee’s findings and recommendations on the steps required to better understand what is happening to the U.S. economy (through better measurement) and policy measures that are needed to measure and sustain the benefits of this “new economy” within each of these sectors. This overview draws together the common themes from these sector-specific findings and recommendations.

SUSTAINING THE NEW ECONOMY

Following the expectations set by Moore’s Law, semiconductors have been a driver of price-performance improvements in information technology. Declines in cost for electronics functionality embedded in semiconductors are the basis of improvements in price-performance in computers and communications equipment, which in turn has been a major factor in increasing the productivity and long-term growth performance of the U.S. economy.2 Parallel improvements in the capacity of communications equipment, described as Gilder’s Law, suggest that the maximum transmission rate for telecoms is tripling every year. Combined with Moore’s Law, which forecasts that computer power doubles every 18 months, Gilder’s Law implies that communications power doubles every 6 months.

While not pretending to be deterministic, Moore’s formulation has endured in part by setting expectations among participants in the semiconductor industry of the pace of innovation and introduction of new products to market.3 In as far as each firm believes that its competitors will release the next technological version in an 18-month timeframe, each firm tends to accelerate the pace of its own

2

Jack E. Triplett, “High-Tech Productivity and Hedonic Price Indexes,” in Organisation for Economic Co-operation and Development, Industry Productivity, Paris: Organisation for Economic Co-operation and Development, 1996; Kenneth Flamm, “Technological Advance and Costs: Computers vs. Communications,” in Changing the Rules: Technological Change, International Competition, and Regulation in Communications, Robert C. Crandall and Kenneth Flamm, eds., Washington, D.C.: The Brookings Institution, 1989; Ana Aizcorbe, Kenneth Flamm, and Anjum Khurshid, “The Role of Semiconductor Inputs in IT Hardware Price Declines,” in Hard to Measure Goods and Services: Essays in Honor of Zvi Griliches, E. Berndt, ed., Chicago, IL: National Bureau of Economic Research, forthcoming.

3

These expectations are reflected in the International Technology Roadmap for Semiconductors. Accessed at <http://public.itrs.net/>.



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