Enhancing Productivity Growth in the Information Age Measuring and Sustaining the New Economy (2007) / Chapter Skim
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Overview of the Findings and Recommendations
Overview of the Findings and Recommendations
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enable the United States to remain an attractive location for these industries within an increasingly competitive global economy. 1This gain in the growth rate appears to be robust, having survived the dot-com crash, the short recession of 2001, and the tragedy of 9/11.
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Triplett, "High-Tech Productivity and Hedonic Price Indexes," in Organisation for Economic Co-operation and Development, Industry productiity, 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
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Yet, as more manufacturing and related research and development move outside the United States, the United States risks losing the critical mass necessary for its 4Ana Aizcorbe, "Moore's Law, Competition, and Intel's Productivity in the Mid-1990s," american economic Reiew, 95:305-308, 2005. 5See remarks by Robert Doering, "Physical Limits of Silicon CMOS Semiconductor Roadmap Predictions," in National Research Council, productiity and Cyclicality in semiconductors: trends, Implications, and Questions, Dale W
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The policies of other nations and regions may well pose challenges to U.S. leadership in the high-technology sector.8 While it is neither possible nor desirable to freeze the allocation of global production, if the United States is to participate successfully in this competition, the federal agencies and state governments will need to undertake measures that strengthen the attractiveness of the United States as a location for the semiconductor, software, and other high-technology research and production, including renewed attention to encouraging and retaining a capable high-tech workforce.9 Expanding Research Funding To sustain the technology trajectory envisaged by Moore's Law requires advanced research to overcome emerging technological "brick walls." Substantial public funding in semiconductor research is necessary if we are to continue to reap the benefits of remaining on the trajectory set out by Moore's Law and for the United States to remain a robust global center for the research, development, and production of semiconductors.
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students, including women and minorities, to pursue training in computer science and related fields.12 In addition to fostering home-born talent, continual progress is also necessary in visa processing in order to attract and retain qualified foreign engineers and scientists. This includes increases in the number of H-1B visas; automatic visa extensions for international students who receive advanced degrees in science, technology, engineering, mathematics, and other fields of national need from U.S.
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The objective of the vertical partnerships is to ensure competitiveness across the development and production chain through synergistic relations among suppliers, manufacturers, and users of new advanced technologies.17 Developing Industry Roadmaps Wider adoption of road-mapping exercises by the computer and computer component industries (along the lines of the pre-competitive research charted by the International Technology Roadmap for Semiconductors) can contribute to the ability of information technology industries to remain on a rapid growth 14National Research Council, Building a Workforce for the Information economy, Washington, D.C.: National Academy Press, 2001, pp.
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Indeed, by creating highly technology-specific industry rules and by attempting to promote competition by requiring incumbents to share the local loops of their network with rivals, the Telecommunications Act of 1996 may have, according to some experts, inadvertently inhibited investment needed to provide high-bandwidth access over the last mile.20 This broadband bottleneck inhibits a fuller capitalization of substantial investments in information technology (IT) and infrastructure, limiting the potential for sustained growth in the economy.
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Swiftly falling IT prices provide powerful economic incentives for the diffusion of information technology. Given that the rate of the IT price decline is a key component of the cost of capital, it is essential to develop constant quality indexes, such as those for computers, for use in the U.S.
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and subsequent incorporation into the National Income and Product Accounts should enable improved analysis and policies to sustain the contributions of computers and computer components to economic growth. Developing Constant Quality Price Indexes for Software Software price indexes, especially for own-account and custom software, must be upgraded to hold software performance constant.
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Wider use of standards can improve our knowledge about investments in software in what is a global industry and facilitate the tracking of software outsourcing.25 Developing Constant Quality Price Indexes for Telecommunications The varying complexity and rates of technical innovation make the contribution of telecommunications equipment to productivity growth a challenge to measure. Current BEA methodologies for making inter-temporal comparisons in price and quality understate true price declines in communications equipment because they do not fully track evolving technological changes.26 While the Producer Price Index has tried to address some of these changes using hedonic techniques, data that consistently identify important current period product characteristics and transaction prices are not yet readily available.27 Research into alternative quality valuation techniques and improved data transparency is required to respond to the technological changes in telecommunications equipment.
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