Sidebar: Productivity Slippage

By Thomas Hoffman

September 29, 2003 12:00 PM ET

Computerworld - The dip in corporate IT innovation may produce a dip in U.S. economic statistics, too. "We're going to pay the price for this down the road, three to five years from now, when productivity growth is lower than it should be," says Erik Brynjolfsson, the Schussel Professor of Management at MIT's Sloan School of Management.
"Right now, we're harvesting the productivity investments" from the late 1990s, Brynjolfsson says, referring to the massive investments that companies made in IT during the dot-com boom. "But if the pendulum swings too far, we risk cutting short the benefits."
In 2002, U.S. productivity grew at a 4.8% annual rate -- a staggering figure, considering the weak economy. Brynjolfsson expects U.S. productivity to grow at an annual rate of 2% for the next few years, much like it did in the 1990s. But if companies continue to trim their IT investments, says Brynjolfsson, "I may trim that [forecast] back a bit."

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