NCPA - National Center for Policy Analysis

Computing Power Continues To Boost Productivity

June 29, 1999

Experts agree that today's prosperity can be traced in no small part to greater productivity generated by the increased use of computers. There is no consensus, however, as to how long this will last.

One of high-tech's biggest champions is Federal Reserve Chairman Alan Greenspan. Yet even he cautioned Congress recently that the "rate of growth of productivity can't increase indefinitely."

  • Gordon Richards, an economist with the National Association of Manufacturers forecasts productivity will grow faster in the next two decades -- from about 1.9 percent a year now to nearly 2.2 percent annually by 2020.
  • From 1973 to 1993, prior to the widespread employment of computers, U.S. productivity growth had been stuck at about 1.1 percent a year.
  • Of the average annual GDP growth this decade of 2.7 percent, Richards estimates that about 1 percentage point can be attributed to technology -- and about two-thirds of that comes from tech-driven research and development, with the remaining one-third coming from better, cheaper and faster computers.
  • Despite the stunning gains in tech-driven productivity, there are "upper limits," Richards says, "but those upper limits are pretty high."

Source: John S. Demott, "Can High Tech Keep U.S. Booming?" Investor's Business Daily, June 29, 1999.

 

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