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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Cactus Jack who wrote (45114)	12/13/2001 6:29:30 PM
From: stockman_scott	Respond to of 65232

Internet Will Boost Productivity Growth: Economists Thursday December 13 5:22 PM ET By Andy Sullivan WASHINGTON (Reuters) - Splashy Web sites like www.pets.com may have gone the way of the eight-track tape, but the Internet will continue to improve the daily lives of Americans over the next five years, say two prominent economists. Broad sectors of the U.S. economy will continue to migrate routine functions like billing and inventory management to the Internet, boosting productivity gains by one-quarter to one-half of 1 percent per year, say Brookings Institution economists Robert E. Litan and Alice M. Rivlin in a new book. At that rate, a worker earning the U.S. average of $36,000 per year would see his real income grow by $2,500 per year, Litan said. ``This is not a trivial gain, this is real money,'' Litan said Monday at a round-table discussion. The Internet's real impact will not come from new dot-com businesses or retail sites like Amazon.com Inc. (Nasdaq:AMZN - news), Litan and Rivlin argue in ``Beyond the Dot.coms: the Economic Promise of the Internet.'' Rather, the global computer network will increase productivity by transforming established industries like manufacturing and health care, which will be able to automate routine paperwork and track shipping online. Governments will save money if citizens can find information and submit routine applications online, and the financial-services industry could save significantly if more people use electronic payments rather than personal checks, Litan and Rivlin say. Even the trucking industry will likely become more efficient as central Web sites provide a more complete picture of what cargo capacity is available and at what prices. The savings will total between $125 billion and $251 billion over the next five years, they say, nothing to sneeze at even in the U.S's $10 trillion economy. Litan and Rivlin reached their estimate after asking a range of experts to examine how various industries will likely use the Internet to their advantage over the next several years. PRODUCTIVITY INCREASES STANDARD OF LIVING The result attempts to isolate the economic impact of the Internet from the economy as a whole. No matter if the U.S. economy remains mired in recession or bounces back, the gains in productivity will be real, they say. Economists see the rate of productivity growth as a key quality-of-life indicator. When companies reap increased profits from more productive operations, they can afford to pay higher wages or lower the cost of their products, enabling workers to buy more. An economy that increases productivity by a rate of 3 percent per year will double its real per capita income in 24 years. Productivity grew at an annual rate of just under 3 percent between the end of World War Two and 1973, when it slowed to around 1.25 percent, according to U.S. government statistics cited in the book. Productivity growth picked up again in 1995, and grew at an average rate of 2.5 percent due in some measure to increased use of the Internet and other information technology, many economists believe. Productivity growth has slowed along with the economy as a whole, the two noted Monday. ``The big question is whenever this recession does end, what will the future growth be like? Will it be a return to rapid growth, or somewhat less than that?'' Rivlin said. Increased security costs after the hijacking attacks of September 11 could slow productivity growth in the near future as well, they said. But the Internet will serve to boost productivity despite these factors, the two said. __________________