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ECommerceTimes.com

U.S. E-Commerce Sets New Record

By Tim McDonald
Jun 6, 2000 12:00 AM PT

The information technology (IT) industry is the number one driving force in the runaway American economy, according to studies by the U.S. government and the Center for Research on Electronic Commerce at the University of Texas, Austin.

U.S. E-Commerce Sets New Record

In its third annual report on the IT industry, the U.S. Department of Commerce (DOC) said the digital age is no longer merely a promise on the high-tech horizon.

"Our sustained economic strength with low inflation suggests that the U.S. economy may have crossed into a new era of greater economic prosperity and possibility, much as it did after the development and spread of the electric dynamo and the internal combustion engine," the report said. "The advent of this new era has coincided with dramatic cost reductions in computers, computer components and communications equipment."

E-Commerce Explosion

The government findings were reinforced by the University of Texas study that showed the digital economy generated nearly $524 billion (US$) in 1999, a dramatic increase from the 1998 total of $322 billion.

E-commerce was the fastest growing category, with revenues increasing by 72 percent, from $99.8 billion to $171.4 billion, said the study, which was funded by Internet equipment provider Cisco Systems, Inc. "This economy is not only growing rapidly, it is becoming more and more productive," said study spokesman Anitesh Barua.

Move on Washington, D.C.

The good news comes at a convenient time for the industry. A cadre of high-tech executives, including Microsoft chairman Bill Gates and Intel chairman Andrew Grove, are scheduled to meet Tuesday and Wednesday in Washington D.C. with congressional leaders and cabinet officials to talk about the future of the industry.

The executives are expected to lobby for more favorable trade barriers and changes in immigration laws. One of the consistent problems in the industry, analysts and executives say, is the lack of qualified American high-tech workers.

Later this month, the U.S. House of Representatives is expected to vote on a bill that would allow companies bring in an increased number of qualified foreign workers. The study showed that those U.S. workers in IT-related jobs earn an average of $58,000 a year, nearly double the average salary of all private industries.

Lowering Inflation

"The first two reports were called 'The Emerging Digital Economy,'" Secretary of Commerce William Daley said at a Monday press conference announcing the government study. "Today, after just 26 months, we dropped the "emerging" because it's here. In fact, it has become the driving force of the American economy."

The DOC report said that dramatically falling prices of IT goods and services -- computer prices have dropped 26 percent a year for the past five years -- have reduced overall U.S. inflation.

"Although IT industries still account for a relatively small share of the economy's total output -- an estimated 8.3 percent in 2000 -- they contributed nearly a third of real U.S. economic growth between 1995-1999," the government report said.

The report also declared that interconnectivity has taken the competitive advantage out of the hands of large corporations, stating that "The Internet has altered this equation by making it easier and cheaper for all businesses to transact business and exchange information."

Online World

The DOC study also pointed out that many U.S. business are failing to take part in the expanding new economy, while the rest of the world is going online.

"More than two-thirds of American manufacturers still do not conduct business electronically," the report said. "In 2000, the number of people with Internet access will reach an estimated 304 million people worldwide, up almost 80 percent from 1999, and for the first time the U.S. and Canada account for less than 50 percent of the global online population."


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