IT worth $2 trillion to the US economy

The economic transformation in the US is being driven by IT

New research claims that IT is responsible for nearly all of the US pick-up in economic growth over the past decade, adding $2 trillion annually to the economy.

A report released today by the Information Technology & Innovation Foundation (ITIF) said that the "economic transformation" resulting from IT is occurring at adoption rates exceeding even the most optimistic forecasts of the late 1990s.

The integration of IT into virtually every aspect of the economy and society is creating a digitally enabled economy responsible for generating the lion's share of economic growth and prosperity, both in the US and abroad, the report stated.

"For the US alone we found that, because of the digital revolution, GDP is $2 trillion larger today than it would have been had growth in the post-1995 era proceeded at the 1974 to 1995 rate," said Robert Atkinson, president of the ITIF.

He added that, while productivity gains from IT are among the highest in the US, most other nations have benefited from the IT revolution, including Australia, Canada, Finland, France, Germany, Korea, Japan, the Netherlands and Switzerland.

IT also benefited developing nations. IT usage in China was responsible for 38 per cent of the increase in total factor productivity growth and 21 per cent of GDP growth.

"First and foremost, policies to support digital transformation need to become the fourth leg of economic policy alongside fiscal, monetary and investment policy," said Atkinson.

"Policy makers must adopt an approach that incorporates IT transformation in all that they do. Accelerating digital transformation is likely to be the most important step policy makers can take to ensure robust economic growth in the future."

Full ITIF report (PDF): Digital Prosperity: Understanding the Economic Benefits of the Information Technology Revolution