The Direct Contribution of Computers to GDP Has Become Large

Year:	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999*
GDP Growth	0.7%	-1.8%	2.7%	2.3%	3.5%	2.3%	3.4%	3.9%	3.9%	3.5%
Without Computers	0.6%	-1.9%	2.5%	2.2%	3.4%	1.9%	2.9%	3.4%	3.3%	2.8%
Computer Contribution	0.1%	0.1%	0.2%	0.1%	0.1%	0.4%	0.5%	0.5%	0.6%	0.7%

*Projected.

• Back in 1987 economist Robert M. Solow wrote in the New York Review of Books: "How come we see the computer revolution everywhere except in the [aggregate] productivity statistics?"
  
• One answer has been that economic growth is underestimated--that the areas in which computers have greatly multiplied productivity have been areas in the service sector in which measurements of output are the worst.
  
• A second answer is that the U.S. economy is very large, and that until the 1990s investments in information processing were not all that large a share of total investment: hence we would not have expected a large contribution from computers to measured GDP.
  
• But in the 1990s--even with potential underestimates, and even with flaws in the statistical system (like those that count investments in software as a current cost of doing business rather than as investment proper)--the contribution of final sales of computers to GDP growth has become quite large. Without growing sales of computers, economic growth over the past six years would have been half a percent per year lower.

Source: Brent Moulton (1999), "GDP and the Digital Economy" (Washington, DC: Department of Commerce)