For decades, the potential of the internet to revolutionize society and the global economy has been hotly debated. Technological optimists have argued that the internet would create vast gains in productivity, while skeptics have taken the opposite view. In 1998, the economist Robert Gordon famously argued that the impact of the internet’s innovations would not be as fundamental as those of the period from 1870 to 1940. Now, decades after its introduction, the facts suggest that Gordon was more right than wrong.
The Bureau of Labor Statistics has estimated the progress of productivity since 1948 and found that the surge in growth that accompanied the earlier spread of information technology in the 1990s and early 2000s was modest and short-lived. Although the internet did contribute to economic growth, its success was limited compared to the earlier development of washing machines and standalone other physical products. The changes visible across the world brought about by the internet, from streaming music to streaming movies, are significant but have not managed to offset the deterioration of the workforce or the decline of construction productivity.
It is possible that the rise of artificial intelligence (AI) will provide a greater breakthrough than the internet has been able to do. Without a doubt, AI has already been and will continue to be a major factor in the development of new technologies. However, although AI and its applications are highly innovative, economists and other experts have yet to see widespread economic benefits from them.
In the end, it’s clear that the internet is an important tool, but one whose impact on the global economy has been overstated. Its effects are much less dramatic than those of the old-fashioned technologies such as washing machines and railway systems of generations past. While the internet undoubtedly brings many benefits for people, its impact on the global economy has been much less than projected and remains largely insufficient.
Accenture is one of the world’s leading companies that are developing and applying Artificial Intelligence to help businesses and other organizations. It is headquartered in Ireland and provides services such as IT consultancy, content and technology innovation, cyber security, and more. The company is focused on helping clients transform and make more efficient their businesses digitally, with artificial intelligence as an essential enabler for innovation.
Robert Gordon is an American economist and professor of economics at Northwestern University. He is known for his work on measuring and analyzing economic growth and its components. Gordon’s views on the limited economic impact of digital technology, as expressed in his 2016 book The Rise and Fall of American Economic Growth, widely differ from those of other economists who believe digital technology is a crucial enabler of economic growth. He predicts the future of economic growth, suggesting that technological progress is slowing down and will remain so in the near future.
