RAND Report Forecasts U.S. Will Continue to Lead Information Revolution

FOR RELEASE
Wednesday
July 16, 2003
   

The United States will continue to lead the information technology revolution for years to come because U.S. businesses are focused on innovation, Americans readily accept change, and the U.S. government provides an environment hospitable to IT business development, a RAND report issued today predicts.

"Unlike many other nations that concentrate on protecting existing businesses and institutions, the United States presses ahead with change even when it means 'creative destruction' of companies that drive its economy today in order to build a stronger economy tomorrow," said Richard O. Hundley, lead author of the study by RAND's National Defense Research Institute.

Looking at IT around the world, the report finds:

Asia already dominates IT manufacturing, accounting for 70 to 80 percent of total world output of a wide range of important IT materials, components, and products. China is rapidly emerging as a major IT player in Asia and the world. Over time, it could possibly leapfrog many nations that today are more advanced. Japan is one of the world's leaders in IT today, but its future course is unclear. If its current economic stagnation brought on by governmental and societal rigidity persists, Japan could gradually fall behind nations in the IT vanguard. This could lead to a power vacuum in Asia "likely to be filled by China." Europe is taking a restrained approach to the information revolution, attempting to steer the process to limit the amount of creative destruction of existing businesses, promote the economic convergence of European nations, and yield positive social outcomes. As a result, Europe is following somewhat behind the U.S. in most IT-related areas today. This is likely to continue in the future, notwithstanding Europe's recent lead in wireless telephony. Most Latin American nations are "also-rans" in the information revolution. This is likely to continue in the future. In the Middle East and North Africa, only a few nations -- principally Bahrain, Qatar, Kuwait, and the United Arab Emirates -- are likely to exploit fully opportunities offered by the information revolution. Most of the other nations in this region will lag behind. Israel is a special case. Its IT future was very promising a few years ago but is now held hostage to the outcome of Arab-Israeli conflict. Most countries of sub-Sahara Africa lack educated populations and adequate financial and physical infrastructures. These nations "will continue to fall further behind much of the rest of the world over the next several decades." There are likely to be many nations throughout the world that are IT losers or laggards. This could pose continuing challenges to U.S. interests.

The report forecasts that the information technology revolution will continue at a rapid pace in the years ahead and "will dramatically transform the world economy and alter social and political life." It says business losses and layoffs that hit the IT sector recently are only temporary setbacks.

"Extreme losers in the information revolution could become 'failed states'...[that are] breeding grounds for terrorists," the report says. This could happen, according to the report, to some nations in Africa, Latin America, the Middle East, or parts of Asia.

Looking even further ahead, the report says "the information revolution could over time change the role of the nation state." As IT-enabled economic activity moves increasingly beyond national control, a diffusion of governance may occur, from the nation state to a variety of intergovernmental and non-governmental organizations and transnational corporations. This will affect smaller nations sooner than larger nations.

The National Intelligence Council, which is the U.S. intelligence community's center for mid-term and long-term strategic thinking, sponsored the RAND study. Other authors of the study in addition to Hundley are Robert H. Anderson, Tora K. Bikson, and C. Richard Neu.

The report also predicts:

E-commerce is likely to experience explosive growth globally, becoming one of the dominant features of the information world. Exponential growth in computing power will continue at least through 2015, when silicon technology is likely to reach its foreseeable limits. At that point, other materials technologies (for example, nanotechnology) are likely to take over. Voice, data and video communications will continue to converge. A major leap in available bandwidth, providing thousands of gigabits per second, is likely within the next two decades. "Terabytes"—trillions of bytes of data—soon will be a practical level of information storage for most computers.

What cannot be predicted, say the researchers, is when and where the next "killer application" will emerge to drive information technology into new spheres of usefulness. Past examples of such so-called "killer apps" are: the Netscape browser in 1994, which set in motion exponential growth in usage on the World Wide Web; or the VisaCalc spreadsheet in 1976, which was the primary impetus for the sales of the early PCs. These are the "wild cards that will determine the fine details of the information revolution," the report concludes.

"No matter what happens," the report says, "the degree to which IT eventually changes the world is unlikely to change. We expect these changes ultimately to be profound."

RAND's National Defense Research Institute is a federally funded research and development center supported by the Office of the Secretary of Defense, the Joint Staff, the unified commands, and the defense agencies.

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More Information

The Global Course of the Information Revolution: Recurring Themes and Regional Variations. 2003. Full Document.