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J. Bradford DeLong
Micro and Macro Studies Agree: Computer Investments
Are Driving Our Current Economic Boom
- According to the macro studies of senior
Federal Reserve economists Steve Oliner and Dan Sichel, more
than eight-tenths of the 1.1 percentage-point acceleration of
economic growth in the second half of the 1990s is due to the
effects of computers.
- According to the micro studies of economists
Erik Brynjolffson (MIT) and Lorin Hitt (Wharton), successful
use of information technology requires substantial changes
in business processes, organizational structure, worker skills,
product innovation and services delivered.
- Such organizational "investments"
have a very large influence on the value of information technology
- Among the most important benefits of information
technology investments are the hard-to-measure intangibles--convenience,
customer service, quality, and variety.
- The benefits of information technology investments
accrue disproportionately to the subset of firms that employ
a cluster of practices involving skilled workers, delegated decision-making,
and team-based production.
- Finally the micro and macro studies agree:
computers are a really big deal.
- Twelve years ago MIT economist Robert Solow
asked why we did not see the impact of the computer revolution
in the aggregate economic productivity statistics.
- In response to his question, an entire intellectual
industry grew up that "explained" why most investments
in information technology were wasted.
- But now we see that it was this exercise
in intellectual ingenuity that was wasted--not computer investments.
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