World Economics - Insight , Analysis and Data

World Economics - Insight , Analysis and Data
Is the Internet Better than Electricity?
Martin Brookes & Zaki Wahhaj
World Economics, June 2001

This article looks at the economic impact of electrification in the United States to gain insights about the possible consequences of today’s information technologies. A close study reveals that electrification significantly raised productivity growth by spurring a redesign of the optimal factory but, strikingly, neither the firms producing the new technology, nor those using it, were able to increase their share of profits in GDP. The authors conclude that even in the unlikely event that the internet and IT matches electricity in economic terms, the only unambiguous beneficiaries would probably be consumers who are able to enjoy lower prices of goods and services and newer products.
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