"Information Technology will be one of the key factors driving progress in the 21st century it will transform the way we live, learn, work, and play. Advances in computing and communications technology will create a new infrastructure for business, scientific research, and social interaction ... . Vigorous information technology research and development (R&D) is essential for achieving America's 21st century aspirations."Information Technology Research: Investing in Our Future. Report of President Clinton's Information Technology Advisory Committee (PITAC), February 1999.
Since these words were written, barely six months ago, appreciation of the massive scale of the Information Revolution has deepened still further. For example, information technology is recognized as the largest single contributor to the rapid and unparalleled 10 years of unbroken economic growth with which the United States has been blessed and continues to be blessed, and it is predicted to be the biggest single component of the economy in just a few years time.
The integration of computation, information and communication into distributed systems that power the Web and electronic commerce are among the most important and fundamental developments in information technology in the last decade of this century. The new capabilities of high bandwidth digital networks for worldwide, instantaneous, and content-rich communication are revolutionizing commerce, industry, education, science and society. This rich mesh of technologies that underlie the evolving, pervasive, global distributed system of computers and information sources includes:
Thought of in these broad terms, these technologies and expertise form the powerhouse for the information technology revolution. They underpin nearly all of the most vibrant sectors of the information economy. Here there is substantial economic growth, the continuing development of new businesses and spin-off companies, and an associated increase in high quality jobs.
The State of Indiana is not well positioned to benefit from the dramatic economic consequences of this revolution, a revolution possibly as profound as the Industrial Revolution. Indiana has among the nation's highest rate of employment growth in the sector of the economy that is growing slowest. Conversely, it has among the nation's lowest rate of growth in the sector of the economy that is growing fastest and which is most closely connected with the prosperity of the information economy.
This is a perilous situation. It renders the State particularly vulnerable to any downward fluctuation in the economy, it precludes the State from the financial benefit of vigorous growth associated with high paying jobs, and it means that too many of the superbly qualified graduates produced by the State's two excellent research universities leave Indiana for greener pastures on the coasts. In order to address Indiana's under-participation in the information economy, technology-based economic development strategies and the growth of information industries must be supported and stimulated throughout the State.
Information Technology is transforming the national economy. A recent study by the University
of Texas Center for Research in Electronic Commerce indicates that the "Internet Economy" (made up
of products and services ranging from electronic commerce to Internet infrastructure technology)
generated an estimated $301.4 billion in U.S. revenue in 1998. The study notes that "In just five years
(since the introduction of the World Wide Web), the Internet Economy already rivals century-old sectors
like energy ($223 billion), automobiles ($350 billion), and telecommunications ($270 billion) in size."
The study also notes the high productivity of this sector of the economy, observing that "the average
revenue per Internet Economy worker is about $250,000, or about 65 percent higher than their
Industrial Economy counterparts." (The Internet Economy
Indicators, Center for Research in Electronic
Commerce, University of Texas, June 1999.)
Over the next five years, the nation will experience continuing substantial economic growth as a result of IT-related employment and industry. According to a study by the U.S. Department of Commerce, the U.S. economy has performed beyond most expectations in recent years, in large measure due to the influence of information technology. The study reports that "Information technology industries have been growing at more than double the rate of the overall economy they now represent 8.2 percent of GDP, up from 4.9 percent in 1985," and that "IT industries by themselves have driven over one-quarter of total real economic growth (not including any indirect effects) on average over each of the last 5 years." Regarding the employment effects of this growth, the report notes that "In 1996, 7.4 million people worked in the IT sector and in IT-related jobs across the economy. These workers earned just under $46,000 per year, compared to an average of $28,000 for the private sector as a whole." (The Emerging Digital Economy, U.S. Department of Commerce, April 1998.)
Taking a closer look at information technology, employment, and economic growth: a study conducted by Virginia Polytechnic Institute and State University (Virginia Tech) and the Information Technology Association of America (ITAA) reports that the number of "core IT employees" in the US is 3,354,000, and the number of core IT vacancies is 346,000. The ITAA/Virginia Tech study counts as "core IT employees" those in the three "core IT occupational categories" defined by the Bureau of Labor Statistics as: computer programmers, systems analysts, and computer scientists/engineers. The study estimates that more than 3.2 million vacancies in the core IT occupational categories will need to be filled in the next five years. (Help Wanted 1998: A Call For Collaborative Action For The New Millennium, ITAA and Virginia Tech, March 1998.)
The economic growth fueled by the information technology industry and employment in IT occupations nationally has so far not been a major factor in the economy of the State of Indiana. A 1998 study of employment in the State revealed that Indiana's labor force is increasingly concentrated in the two occupational categories that have ranked last in growth nationwide. Both are occupational categories linked to Indiana's manufacturing economy: machine operators (a category that actually shrank nationally, even while it increased in Indiana), and precision, craft & repair occupations. The report also noted that Indiana's labor force is growing more slowly than the national average, or in some cases is even shrinking, in those occupational categories that are growing fastest on a national basis. (The Evolution of Indiana's Labor Force, 1968-1997: A Comparative Analysis, Indiana Fiscal Policy Institute, December 1998.)
Indiana's poor showing in the labor force analysis is not entirely due to the lack of a capable workforce, or at least a potential workforce. A recent study shows that Indiana produces almost 20% more college graduates at the baccalaureate level, per capita, than the national average. However, the same study shows that Indiana "exports" more than one-third of its college graduates to other states, and that Indiana's retention of baccalaureate degree holders is almost 30% below the national average. This study notes that job opportunities, compensation, and other employment factors are the primary motivation for those who leave the state after graduation. (Graduation Migration from Indiana's Postsecondary Institutions, Indiana Fiscal Policy Institute, March 1999.)
A recent Central Indiana workforce study conducted by the Hudson Institute confirms the importance of "moving the local economy more rapidly toward 'high-tech' industry and employment." (An Assessment of Central Indiana's Workforce Development System, Hudson Institute, January 1999.) Furthermore, last year's report from the Corporate Community Council Task Force endorses workforce and economic development strategies that support high-technology cluster industries such as information technology equipment and services, software development, and communications technology. (A New Approach to Central Indiana Growth and Opportunity, Indianapolis Corporate Community Council, July 1998.)
Indiana has the potential to significantly increase and expand its participation in the growth of the Internet economy, particularly given the advantages it has in workforce training and development. The availability of a trained workforce is an essential factor for economic growth through new job creation, and Indiana's institutions of higher education provide the infrastructure necessary to educate the skilled workforce who can participate in this economic growth. Indiana has demonstrated the capacity to educate and "export" college graduates. Since employment-related factors are a primary reason for this exodus of graduates, an improvement of employment opportunities should help retain a greater number of Indiana's young people.
A recently released study of the "new economy" analyzed the 50 states according to several factors including involvement in the digital economy, capacity for technological innovation, and various workforce indicators. Indiana ranked 37th overall in the "New Economy Index." The State's worst ranking was on the makeup of Indiana's workforce (43rd), which is consistent with the Indiana labor force study cited earlier. Modestly better were the State's rankings on participation in the digital economy (28th) and capacity for technological innovation (29th). The study offered this observation however: "While lower-ranking states face challenges, they can also take advantage of new opportunities. The IT revolution gives companies and individuals more geographical freedom, making it easier for businesses to relocate, or start up and grow, in less densely populated states, farther away from existing agglomerations of industry and commerce. But a key policy challenge will be to find a way to extend advanced telecommunications infrastructure to these places." (The State New Economy Index: Benchmarking Economic Transformation in the States, Progressive Policy Institute, July 1999.)
While the situation for Indiana is daunting it is not without some promise. Indiana University and the State of Indiana have begun to demonstrate a heightened commitment to becoming leaders in information technology, and Indianapolis in particular is becoming known as a national hub for high-speed network services. The private sector as well is expressing greater confidence in the State's ability to participate in the new economy. It is on the basis of these emerging strengths and the opportunities they promise that the strategy has been developed for creation of the Indiana Pervasive Computing Research Initiative.
Executive Summary | Table of contents | 2. Providing a Solution
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