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Information Technology and U.S. Competitiveness

© Bryan Johnson

Information is the key to the world market. Therefore, information and the technologies necessary to access, store, control, and disseminate it will become increasingly important to America's long-term economic prosperity in the coming decades. With American business, communications, and technological innovation occurring more and more in "cyberspace," the U.S. has an obvious economic and security interest in maintaining its current dominance of this technology and rapidly expanding this market.

Everything from banking, financial services, consulting, insurance, and scientific research to military intelligence now occurs through the interlinked world of computers, modems, telephone lines, and databases known collectively as the Internet. With its ability to allow two scientists at opposite ends of the country to work simultaneously on the same mathematical equation or scientific formula, the Internet is becoming what the telegraph was in the 1800s. Is America prepared to meet the challenges of the computerized information age?

While many complain that the U.S. is losing its competitive edge in manufacturing items like steel, little attention is paid to the tremendous progress America has made in becoming the world's most competitive technological nation. The U.S. may no longer lead the world in steel production, but it does lead the world in manufacturing the supercomputers, advanced semiconductors, and computer software needed to communicate in cyberspace. And therein lies America's competitive edge in the future.

American manufacturers today are producing some of the most promising and technologically advanced products in the world. There are three major technological areas essential to conducting activities in cyberspace: semiconductors (computer chips and components); computer hardware; and computer software. America is the world leader in all three areas. Consider the following examples:

Semiconductors. Just a few years ago, the U.S. was well behind the Japanese in producing advanced semiconductors. In the 1980s, many policymakers feared that Japan's dominance in this field, by denying the United States immediate and guaranteed access to the most advanced electrical components, eventually would threaten America's national security. This fear turned out to be unjustified. Today, America once again is the largest manufacturer of semiconductors, with almost a global monopoly on the manufacturing of advanced microprocessors like Intel Corporation's Pentium and Pentium II processors, the "brain" in many of today's personal computers.

Computer Hardware. The key to cyberspace is the computer itself, and from the smallest personal computer that sits on a desk to the largest supercomputers, America is the world leader. U.S. computer companies have set the standards all other countries must follow. For example, the personal computer, used around the world to access cyberspace, comes in one of two formats: the International Business Machines (IBM) PC or the Apple Computer. Both are manufactured by American companies. Advanced supercomputers like the Cray Computer and Sun Micro Systems computers also are U.S. products. Make no mistake: America is the largest source of computers providing access to the Internet. In fact, America's nearest competitor-Germany-has only about 7 percent of the total number of computer hosts providing access to the Internet. The U.S. has almost 90 percent. Thus, America has a tremendous lead in this crucial high-tech area.

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