Digital Economy 2003 (DE2003) is the Department’s fifth annual report on conditions in U.S. information technology (IT) industries and the effects of IT on national economic performance. Each of these reports has addressed questions that economists have sometimes found difficult to answer. Early nineteenth-century economists earned a reputation as practitioners of the “dismal science” by underestimating the ability of technological innovation to drive faster than expected economic growth. This year, the basic analytic challenge has been complicated by an atypical recovery. Productivity growth has been remarkably strong, output growth has gathered impressive momentum, and prices remain low. But employment has lagged. DE2003 examines IT’s role in these unusual developments.
Important developments that we anticipated (or hoped for) in our 2002 report have come to pass. Renewed IT investment and strong if selective growth in IT-producing industries have helped the sector reassert its role as an engine of economic growth. In addition, strong productivity growth during and after the 2001 recession has answered the challenge posed four years ago by Robert Solow when he suggested that IT’s enduring effects on productivity would be clear only when the economy had weathered its first IT-era recession.
DE2003 shows that: (i) recovery in IT-producing industries and increased use of IT throughout the economy are once again helping to drive very rapid productivity and output growth; (ii) employment growth in IT industries and IT occupations has yet to recover; (iii) highly competitive U.S. IT-producing industries are globally integrated; and (iv) even as we begin to take its presence for granted, IT continues to alter our lives, expanding our choices, and presenting us with new opportunities and challenges. In short, our continuing study shows that the digital era is living up to many of our expectations and hopes. But there is much more to understand about IT’s role in our growing and changing economy.
