The economic impact of information technology

The economic impact of information technology has been a subject of a great deal of debate. For business economists, it is useful to identify how information technology (IT) is likely to impact the economy, because IT (defined as computer and communications technology and its applications) is likely to have a substantial impact on the economy's growth during the coming decades. The reason for this is the use of IT by nearly all industries in the economy's base, so that IT becomes a universal input to nearly all other outputs. If IT costs decline, they can create substantial economic gains for many of the industries that use IT, because money spent on IT can be invested in other inputs and improvements in production or services. Furthermore, because business relies upon IT to do a wide range of tasks and to create competitive advantage, by facilitating these tasks for end users, important gains are achieved that are difficult to measure in a classic input-output framework. In addition, IT, seen in a larger context, should have even wider impacts on the economy, because new channels of communications, such as the Internet, cellular television, and broadband applications, will provide business with new channels to reach customers and suppliers.