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IT added $2 trillion to the U.S. economy in the past decade, according to a report released Mar. 13 by the Washington, D.C.-based Information Technology & Innovation Foundation, a technology-promoting public policy think tank.
The report, Digital Prosperity: Understanding the Economic Benefits of the Information Technology Revolution, found that the economic transformation resulting from IT was occurring at adoption rates exceeding even the most optimistic forecasts of the late 1990s.
“For the United States alone, what we found was that because of the digital revolution, GDP is $2 trillion larger today than it would have been had growth in the post-1995 era proceeded at the 1974 to 1995 rate,” said Robert D. Atkinson, Ph.D., president of the Information Technology & Innovation Foundation.
“We need to recognize this phenomenon and adjust our thinking to make IT a centerpiece of our economic policy–from planning and forecasting to tax policies that incent future growth.”
By integrating IT into virtually all aspects of the economy and society, the digitally enabled economy that was created is responsible for generating a large amount of economic growth and prosperity, finds the report, not just in the United States but abroad, and in developing nations.
Australia, Canada, Finland, France, Germany, Korea, Japan, the Netherlands and Switzerland are among the nations benefiting from the productivity impact of IT.
In developing nations, IT expenditures rose twice as fast from 1993 to 2001 computer to the OECD (Organization for Economic Co-operation and Development) average. The report uses the example that IT usage in China was responsible for 38 percent of the increase in total factor productivity growth and 21 percent of GDP growth.
The Digital Prosperity report argues that there is still significant potential growth to be derived from leveraging IT. Spurring digital transformation, it argues, should be a top priority of policymakers in developed and developing nations.
“First and foremost, policies to support digital transformation need to become the fourth leg of economic policy alongside fiscal, monetary and investment policy,” said Atkinson.
“In particular, this means that policy makers must adopt an approach that incorporates IT transformation in all that they do. Accelerating digital transformation is likely to be the most important step policy makers can take to ensure robust economic growth in the future.”
The report notes that although the private sector will drive much of the digital transformation, government can play a supporting role by upping research in emerging IT areas, and leading by example by leveraging their own IT efforts to have more effective management.
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