ABSTRACT
By “information revolution,” we refer to the rapid technological advances in computers, communications, and software that have led to dramatic decreases in the cost of processing and transmitting information. The price of a new computer has dropped by 19 percent per year since 1954, and information technologies have risen from 7 to about 50 percent of new investment. “Moore’s Law,” which has held for three decades, describes a doubling in the capacity of chips every eighteen months. Similarly, growth of the Internet and the World Wide Web has been exponential. The Internet was only opened to the public in 1990. Communications bandwidths are expanding rapidly, and communications costs continue to fall. As with steam at the end of the eighteenth century and electricity at the end of the nineteenth, there have been lags in productivity growth as society learns to utilize the new technologies. Although many industries and firms have been undergoing rapid structural changes since the 1980s, the economic transformation is far from complete. It is generally agreed that we are still in the early stages of the information revolution.
