U.S. Government acknowledges IT’s importance to productivity

According to InformationWeek, the Federal Reserve Board will soon release a report that attibutes the the dramatic increase in US business productivity in the past five years to the implementation of information technology. CEOs, COOs, CFOs and, most specifically, CIOs reached that conclusion years ago, but the reserve board’s acknowledgment gives IT—and by extension—knowledge management the credit it deserves.

The federal reserve measures productivity as, simply, output per hours at non-farm operations. From the early '70s to the mid-'90s, US productivity grew sluggishly—at about 1.5% annually. But during the past five years, it jumped suddenly to about 2.66% annually. That 1% increase may seem small, but it translates to about an extra $70 billion of productivity output per year.

InformationWeek says in the upcoming report, federal reserve economists calculate that nearly $50 billion (about two-thirds of the increased productivity) is due to the use of IT at US businesses, as well as the production of computer products. A similar 1994 study examining the impact of IT on productivity in the ’90s showed no evidence of an effect.