The Skills Imperative: Talent and U.S. Competitiveness

What’s New about the New Economy

DEBORAH VAN OPSTAL

The Skills Imperative: Talent and U.S. Competitiveness

The nation must do more to give people the skills they will need in our evolving economy.

Is there anything fundamentally “new” about the economy? With the benefit of hindsight, we know that predictions about the demise of the business cycle were premature. “New economy” booms can be busted. All companies, even the dot-coms, need a viable business plan and a bottom line to survive. Market demand is still the dominant driver of business performance; the “build it and they will come” supply model proved wildly overoptimistic. But the assets and tools that drive productivity and economic growth are new. The Council on Competitiveness’s latest report, U.S. Competitiveness 2001, links the surge in economic prosperity during the 1990s to three factors: technology, regional clustering, and workforce skills.

Information technology (IT) was a major factor in the economic boom of the 1990s. The widespread diffusion of IT through the economy, its integration into new business models, and more efficient IT production methods added a full percentage point to the nation’s productivity growth after 1995. Now the information technologies that powered U.S. productivity growth are being deployed globally. The sophistication of information infrastructure in other countries is advancing so rapidly that many countries are converging on the U.S. lead. With 221,000 new users across the globe expected to log on every day, the fastest rates of Internet growth are outside the United States.