Measuring and Sustaining the New Economy Report of a Workshop (2002) / Chapter Skim
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Raising the Speed Limit: U.S. Economic Growth in the Information Age
Raising the Speed Limit: U.S. Economic Growth in the Information Age
Pages 50-59
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From page 50... ...
RAISING THE SPEED LIMIT: U.S. ECONOMIC GROWTH IN THE INFORMATION AGE Dale Jorgenson Harvard University Professor Jorgenson said he would discuss the "relatively narrow issue" of how to integrate the picture of technology painted by Vint Cerf with the macro picture of the economy described by Robert Shapiro.
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From page 51... ...
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.
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From page 52... ...
Moreover, if one rates the nominal share by the growth rate of output information technology becomes far more important. In fact, it accounts for about 20 percent of the economic growth that has taken place in the "new era" since 1995, the point of inflection he identified in the price statistics (Figure 4~.
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From page 53... ...
economic growth, 1959-1998. Information Technology in the New Economy Dr.
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From page 54... ...
The rate is a huge amount relative to the rest of the economy where investment prices tend to trend upward rather than downward. Third, investors have to pay for depreciation, because information technology turns over every three or four years, costing another 30 percent.
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From page 55... ...
Features of Recent Economic Growth He then turned to another dimension of change, which is the substantial recent growth of the economy. The basic explanation for this growth is that components of information technology have been substituted for other inputs.
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From page 56... ...
Rising Total Factor Productivitys in Information Technology This leads to the following question: How much of total factor productivity growth in information technology which could lead to a permanent increase in our economic growth rate is due to identifiable changes in technology?
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From page 57... ...
A consensus has emerged that the information technology revolution is clearly visible in productivity statistics. The visibility of this revolution has been building gradually for a long time, but something sudden and dramatic happened in 1995, when an accelerated decline in computer prices, pushed by the decline in semiconductor prices that preceded it, made obvious the contribution of information technology to productivity statistics.
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From page 58... ...
This observation was based on his experience of 10 years as a CIO, his role in re-engineering a company three times, and his consulting experience on about 50 other projects. The last re-engineering project cost $175 million, of which information technology expenditures were less than $10 million.
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From page 59... ...
. The authors write that re-engineering "...was enthusiastically advanced by the popular business press and was tried by a substantial number of major business firms, despite high costs and a failure rate of 75 percent."
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