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Report tracks cybertrends

A new study by the American Electronics Association confirms that the high-tech industry is driving national economic growth.

Confirming the conventional wisdom that the high-tech industry is driving national economic growth, the American Electronics Association will release a report on Tuesday quantifying the latest cybertrends.

The report, dubbed "Cybernation," among the most comprehensive of its kind to date, analyzes high-tech employment, wages, sales, research and development expenditures, import-export flows, and investment patterns. Funded by Nasdaq and conducted over a nine-month period, the study illustrates through statistical data how electronic commerce and online information services have grown to make high technology the second largest U.S. industry behind private health services.

The report illustrates just how dominant the computer sector of the economy has become as technology has become increasingly advanced. For example, the study found that the U.S. high-tech industry currently employs some 4.3 million workers.

The Cybernation report also provides global context, adding perspective to its profile of the high-tech industry by drawing direct comparisons between the United States and more than 50 countries worldwide. The study found, for example, that the United States has more computers per capita than any other country. In a cautionary note, it also found that Japan is currently ahead of the United States in the area of nondefense R&D spending on high-tech initiatives.

AEA research analyst Matthew Kazmierczak, one of the study's authors, said the conclusions drawn by the report were not surprising, but rather provide some statistical muscle for many of the assumptions people have about the high-tech industry. For example, the study found that the average wages of those who provide high-tech services are, in Kazmierczak's words, "phenomenal," with high-tech employees earning 73 percent more, on average, than private-sector employees. Providers of software services in particular, he said, are finding current economic trends to be extremely favorable.

Not all of the study's findings were positive, however. In keeping with concerns that have been expressed by many high-tech companies, the study revealed that, as high-tech job opportunities mushroom, so must a proportionate number of highly skilled employees, which up until now has not happened. If a highly skilled workforce is not maintained, there could be negative consequences for the technology industry in the future, the study found.

Based on figures provided by the Department of Commerce that were broken down into 45 categories, such as computer equipment, software services, and industrial electronics, the study analyzed only those areas of the economy in which high tech has had a direct impact. Kazmierczak says this resulted in a rather conservative methodology when compared with similar studies.

"Our definitions were based only on direct effects, not induced or indirect effects," Kazmierczak said. "We preferred to estimate on the low end."

Kazmierczak added that the study marks the first time in which such a broad range of indicators were compiled using an identical methodology applied consistently across the various categories. He said this allows anyone using the study for research to make accurate comparisons.

Kazmierczak warned, however, that there were some unavoidable shortfalls in compiling the data for the study. Because high tech is so pervasive in so many different industries, the study most likely understated the number of economic areas in which high tech has had an impact.

Cybernation is a companion piece to an earlier AEA study called "Cyberstates," which was released in January and provided a state-by-state overview of the high-tech industry. Like Cyberstates, the new study is targeted at a broad-based audience of policy analysts, journalists, academic researchers, computer industry executives, and anyone else looking to get up to speed on the latest economic indicators for high tech.

"This study was conducted, basically, because there's such a lack of quality information on the high-tech industry," Kazmierczak said. "Everyone knew that it was large and important, but no one knew to what degree."