IT and the Business Cycle :: essays research papers

IT and the Business Cycle There is a steady business cycle, which terminations for about 9 years. The cycle is characterised by a close of growth, then strong growth and then recession. Unfortunately, the cycle isnt exact and it isnt dependable, or else you could make money out of it, by gambling on it. sometimes it lasts 7 years, sometimes 10 or 11. In the later stages of the last business cycle some odd things were happening. Growth in the US thriftiness was much higher than anyone expected and unemployment much lower. Productivity statistics from the US G everyplacenment suggested that from 1996 productivity was improving at an average 2.2 percent per year, which was a dramatic improvement on the 1 percent average for the forward 25 years. The distri howeveror point at which productivity turned up coincided with the point at which the Internet started to become visible. That may have been a coincidence, but there was another strange quirk in the figures. Investment by US com panies since 1990 has been static in every area except in IT, where it rose dramatically by a factor of 14 over the decade. And to cap it all, the bulk of the productivity improvement in the US economy was confined to the IT industry itself. In theory, IT should be counter-cyclical and it usually is. The benefit that IT is divinatory to deliver is automation. It either cuts costs and/or improves productivity, accordingly. The figures from the US suggest that it was doing the last mentioned in the glorious 90s and particularly in the later years. In the menstruation part of the business cycle it lead be cost sore that matters. The heady days of optimism are over and the era of cautious IT enthronization has arrived. So what are the information technologies that will do well in this era? Heres one thought. Consider the anomaly of Moores Law. This suggests that CPU power will double every 18 months and it has done provided that for over 30 years. Actually Moores law doesnt just apply to CPUs, but also memory, disk, buses and just about every aspect of a computer or network. 1 would think then, that it would have brought down the cost of computing as a matter of course. However, it didnt have that effect until recently, because most of the accelerated capability was delivered to the PC where its contribution to productivity was minimal.