During the 1980s and into this decade, U.S. businesses poured billions of dollars into computers and other information technology. Yet the productivity performance of the U.S. economy in the 1980s remained lackluster--especially in the service sector--leading many observers to suspect that companies were not getting their money's worth from these high-tech investments. At the same time, academic research found little evidence of a productivity payoff. But have the tables now turned? With an apparent improvement in productivity in recent years, much academic and popular opinion now suggests that the payback is at hand or just around the corner.

As the nation embarks on a major effort to develop an Information Superhighway, it is critical for policymakers, opinion leaders, and others to understand the contribution and role of information technology in the economy during recent decades. This book provides a straightforward guide to the economic issues underlying the debates about these issues, using quantitative and historical analysis, supplemented with interviews of small and large service-sector companies.

To set the stage, Daniel Sichel reviews the debates over the role of computers and summarizes the essential facts about computer use, with a particular emphasis on software. Going beyond basic facts, Sichel describes an economic framework for assessing the aggregate economic impact of computers in recent decades and for looking ahead at this impact in the future. Quantitative estimates from this framework, along with supporting historical and interview evidence, place limits on the contribution of computers to the overall economy. When compared to the size of the slowdown in productivity growth in the early 1970s, the overall impact of computers appears relatively modest, in part because the share of computers in the nation's capital stock is surprisingly small. Looking ahead, Sichel also raises questions as to whether computers are likely to solve the nation's productivity woes in the future.

As the accelerated technological advances of the past two decades continue to reshape the United States' economy, intangible assets and high-technology investments are taking larger roles. These developments have raised a number of concerns, such as: How do we measure intangible assets like organizational capital and research and development investment? Are we accurately appraising the contribution and depreciation of high-technology capital? The answers to these questions have broad implications for the assessment of the economy's growth over the long term, for the pace of technological advancement in the economy, and for estimates of the nation's wealth.
In" Measuring Capital in the New Economy," Carol Corrado, John Haltiwanger, Daniel Sichel, and a host of distinguished collaborators offer new approaches for measuring capital in an economy that is increasingly dominated by high-technology capital and intangible assets. As the contributors show, these resources affect the economy in ways that are controversial and notoriously difficult to appraise. The challenge in measuring intangibles and the need for transparency in business accounting create inevitable tensions. At the heart of many of the recent corporate scandals has been an uncertainty about the treatment of intangibles in business accounts. In this detailed and thorough analysis of the problem and its solutions, the contributors study the nature of this economic challenge and provide guidance as to what factors should be included in calculations of different types of capital for economists, policymakers, and the financial and accounting communities alike.