Enhancing Productivity Growth in the Information Age Measuring and Sustaining the New Economy (2007) / Chapter Skim
Currently Skimming:
II FINDINGS AND RECOMMENDATIONS, Findings and Recommendations
II FINDINGS AND RECOMMENDATIONS, Findings and Recommendations
Pages 17-60
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 19... ...
Stiroh, "Raising the Speed Limit: Economic Growth in the Information Age," in National Research Council, Measuring and sustaining the new economy, Dale W Jorgenson and Charles W
|
From page 20... ...
b. The relentless decline in the prices of information technology equipment has steadily enhanced the role of IT investment across the economy.2 Productivity growth in IT-producing industries has risen in importance and a productivity revival is under way in the rest of the economy.
|
From page 21... ...
There is some debate among economists about how easy it is to infer growth rates of total factor productivity growth from relative price declines. While Aizcorbe concludes that quality change was the dominant source of the increase in relative price declines in the mid-1990s, others might disagree.
|
From page 22... ...
Since the end of the previous recession in 2001, productivity growth has been running at about two-tenths of a percentage point higher than in any recovery of the post-World War II period.12 5. A structural change most associated with the New Economy today is the trans formation of the Internet from a communication media to a platform for service delivery.13 This has contributed to the remarkable growth of the U.S.
|
From page 23... ...
b. Substantial resources to develop price indexes and related analyses are needed to understand the sources of productivity growth in the economy and to develop the policies to sustain it.
|
From page 24... ...
See Ana Aizcorbe, "Why Are Semiconductor Price Indexes Falling So Fast? Industry Estimates and Implications for Productivity Growth," op.
|
From page 25... ...
NOTE: All price indexes are divided by the output price index.
|
From page 26... ...
24 See Kenneth Flamm, "Moore's Law and the Economics of Semiconductor Price Trends," op. cit., 2004, and "Microelectronics Innovation: Understanding Moore's Law and Semiconductor Price Trends," op.
|
From page 27... ...
61-64. 32See, for example, European Semiconductor Industry Association, the european semiconductor Industry: 2005 Competitieness Report, op.
|
From page 28... ...
2. 34European Semiconductor Industry Association, the european semiconductor Industry: 2005 Competitieness Report, op.
|
From page 29... ...
Wessner, ed., Washington, D.C.: National Academy Press, 2001. 37The need for these actions is emphasized in the recent Congressionally mandated NAS/NAE/ IOM study, Rising aboe the Gathering storm: energizing and employing america for a Brighter economic Future, op.
|
From page 30... ...
To maintain the innovative pace of the industry, with the attendant benefits for the U.S. economy, national investments in university research programs that explore and develop promising technologies are needed.
|
From page 31... ...
43European Semiconductor Industry Association, the european semiconductor Industry: 2005 Competitieness Report: executie summary, op.
|
From page 32... ...
Taken together, these features of information technology mean that advances in semiconductor technology can have substantial impacts on long-run economic growth.
|
From page 33... ...
The end of a two-decade slowdown in U.S. productivity growth that took hold in the 1970s and that coincided with a significant erosion of the country's industrial power can be traced to a sudden speed-up in the rate of decline of semiconductor and computer prices.50 b.
|
From page 34... ...
c. At the same time, the foundry model permits easier entry and greater competition through the development and commercial application of 52The European Semiconductor Industry Association (ESIA)
|
From page 35... ...
cit. 58 The European semiconductor industry affirms that national incentives are shaping international competition and calls for its governments and the EU technology programs to become more focused.
|
From page 36... ...
Vigorous price competition among a multiple vendor base ensured that prices and costs would decline sharply, enabling the growth of IT use and, with it, the Internet and globalization phenomena. For a detailed analysis of trade in semiconductors, see Kenneth Flamm, Mismanaged trade, op.
|
From page 37... ...
67NAS/NAE/IOM, Rising aboe the Gathering storm: energizing and employing america for a Brighter economic Future, op.
|
From page 38... ...
These measures contributed to a very significant competitive advantage and a powerful incentive for inward investment, reflected in the surge in new production facilities in China. 70The output price index referred to in Figure 2 is the GDP deflator, but differs from the typical BEA GDP deflator due to methodology.
|
From page 39... ...
Increased computing power also improves the speed and responsiveness of household computer 72See Ana Aizcorbe, Kenneth Flamm, and Anjum Kurshid, "The Role of Semiconductor Inputs in IT Hardware Price Declines," in Hard to Measure Goods and serices: essays in Honor of Zi Griliches, E Berndt, ed., Chicago, IL: National Bureau of Economic Research, forthcoming.
|
From page 40... ...
:117-130, December 1967. In 1985, BEA incorporated constant quality price indexes for computers and peripheral equipment constructed by IBM into the National Income and Product Accounts (NIPA)
|
From page 41... ...
The computer component industry has developed a variety of formal and informal measures to gauge the relative performance of its products. Fur ther development of these measures 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.
|
From page 42... ...
and the service life of software is often hard to anticipate. The nature and functions of software also evolve over time, requiring the development of quality-adjusted price indexes for various types of software.
|
From page 43... ...
A major challenge lies in constructing constant quality price indexes for custom and own-account software.
|
From page 44... ...
Work by Q/P Management Group and the Analysis Group is expected to produce new price indexes for custom and own-account software for the U.S. national accounts.
|
From page 45... ...
cit. 86NAS/NAE/IOM, Rising aboe the Gathering storm: energizing and employing america for a Brighter economic Future, op.
|
From page 46... ...
Communications technology is crucial for the rapid development and diffu sion of the Internet, perhaps the most striking manifestation of information technology in the American economy. By storing, sorting, and distributing vast information very quickly and at very low cost over communications networks, the Internet may be potentially very important in the longer run for the continued growth in output and improved productivity of the United States and other knowledge economies.90 Communications equipment is also 89As mentioned earlier, this problem was recently noted and a congruent recommendation made by the National Academies Committee on the Future of Supercomputing.
|
From page 47... ...
:615-621, 1998. 92Mark Doms, "The Record to Date: Quality Adjusted Prices for Equipment," in National Research Council, the telecommunications Challenge: Changing technologies and eoling policies, op.
|
From page 48... ...
94John B Horrigan, "Broadband Adoption at Home in the United States: Growing but Slowing," Pew Internet and American Life Project, paper presented to the 33rd Telecommunications Policy Research Conference, September 25, 2005.
|
From page 49... ...
cit. 97William Raduchel, "The End of Stovepiping," in National Research Council, the telecommunications Challenge: Changing technologies and eoling policies, op.
|
From page 50... ...
The move towards virtualization, grid computing, and Web services is lead ing to a major shift in the nature of information technology assets from computers, software, and myriad related components that companies own to services that firms purchase from on-line utility providers.103 Recommendations 1. The varying complexity and rates of technical innovation make the contribu tion of telecommunications equipment to productivity growth a challenge to measure.
|
From page 51... ...
broadband adoption for households lags that of other countries, rela tively little is known about factors that affect the broadband adoption path 105For additional perspective on the types of technological changes in telecom equipment that, at least conceptually, could be valued in a hedonic model, see Michael Holdway, "Confronting the Challenge of Estimating Constant Quality Price Indexes for Telecommunications Equipment in the Producer Price Index," Bureau of Economic Analysis Working Paper, 2002. 106See Action D-4 on ensuring ubiquitous broadband Internet access in NAS/NAE/IOM, Rising aboe the Gathering storm: energizing and employing america for a Brighter economic Future, op.
|
From page 52... ...
Rapid progress in information and communications technologies combined with continuing efforts to liberalize international trade and investment in services, have increased the tradability of services and created new types of tradable services.109 This has led to a new wave of globalization in the services sector, with offshoring of particular types of services now becoming increasingly common.
|
From page 53... ...
This phenom 110See comments by William Raduchel, "The End of Stovepiping," in National Research Council, the telecommunications Challenge: Changing technologies and eoling policies, op.
|
From page 54... ...
b. By diffusing technology and research capabilities around the world, globalization enables other countries, including newly emerging econo mies like China and India, to pursue technological leadership in key areas.
|
From page 55... ...
119McKinsey Global Institute, the emerging Global Labour Market, Part II: "Synthesis of Findings: Supply of Offshore Talent," 2005. Some statements about the numbers and qualifications of Indian and Chinese engineers may be overstated, while U.S.
|
From page 56... ...
123 In this regard, the recent flattening of research funding and the elimination of funding for new awards from the Advanced Technology Program are troubling. The recent NAS/NAE/IOM report, Rising aboe the Gathering storm: energizing and employing america for a Brighter economic Future, op.
|
From page 57... ...
in the Department of Labor, and the Board of Governors of the Federal Reserve System. 124NAS/NAE/IOM, Rising aboe the Gathering storm: energizing and employing america for a Brighter economic Future, op.
|
From page 58... ...
BEA's estimates are used to allocate the GDP to individual industries. BLS generates its own estimates in arriving at measures of industry-level productivity growth.
|
From page 59... ...
economy provides a unifying methodology for integrating the National Income and Product Accounts generated by BEA and the productivity statistics con structed by BLS.130 The next step is to develop a complete version of the BLS productivity statistics that is consistent with a new system of official industry accounts recently released by BEA.131 5. To further explore these proposals for a new architecture, additional resources should be made available.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.