Beyond the dot.coms: the economic promise of the Internet - download pdf or read online

By Robert E. Litan

During this quantity, revered economists articulate the predicted fiscal impression of the web among 2001 and 2006. Drawing on study carried out by way of the Brookings and BRIE job forces, the authors deal with the internet's power affects on productiveness, costs and industry constitution.

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Firms such as Cisco Systems and Oracle, which rely heavily on webbased technology for their internal communications and management, claim significant savings from this source. Andrew McAfee of the Harvard Business School, who examined the manufacturing sector, projects that additional reductions in cost should materialize as more and more firms shift to web-based technologies for information flow and back-office functions, such as purchasing, invoicing, and payments. “While these activities are mundane and only rarely considered possible      sources of competitive advantage, they still are time consuming and expensive to carry out in the absence of automation.

To be sure, the transitions for the individuals involved can be difficult and painful, as can any innovations that affect people’s livelihoods. These effects should raise the average level of productivity in each sector and, in turn, the entire economy. Our sector studies, however, have not attempted to isolate these types of effects— indeed, it is not clear that such impacts can be quantified—and for this reason (among others) the total quantifiable estimates of the Internet on productivity presented later may well be conservative.

Perhaps as much as $27 billion a year could be saved if health insurance claims processing were shifted to the web, with improved speed and convenience thrown into the bargain. Medical record management is another area in which the Internet offers great potential not only for cutting costs, but for improving the quality and effectiveness of care. In January 2001 the Department of Health and Human Services issued comprehensive rules protecting the privacy of individuals’ medical records. It is still early to know if these regulations will constitute a significant barrier to the development of databases that can be accessed by a wide range of providers with appropriate authori-      zation.

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