U.S. leads world in IT exports and imports, comprehensive study shows

According to the fifth annual Department of Commerce report—The Digital Economy, released in December 2003—the U.S. remains the world's largest exporter of IT goods and services, despite also experiencing the 13^th consecutive year of IT foreign trade deficit—a record $86 billion for the year. Estimated sales of U.S. IT-producing companies and their global affiliates topped $1 trillion in 2002, the latest year for which data was complete.

The decidedly bullish report indicates that in the third quarter of 2003, IT-producing industries will contribute nearly a third of the estimated total 2.9 percent of real U.S. economic growth for the year, resolving the lingering question of whether the industry remains an engine for economic growth, long term.

Recovery during 2003 in the various IT industry segments was selective. Computers and semiconductors, which were hard hit in the recession, rebounded during 2003, though communications equipment manufacturing remained weak and IT employment, which fell sharply during the recession, is recovering at a sluggish pace. IT services—an area of increasing concentration of IT output, which grew faster than IT manufacturing 1996-2000—grew moderately in 2003.

U.S. productivity growth for the period 1989 to 2001 was solidly fueled by investment in and use of IT, according to the study. Industries considered "IT-intensive" experienced annual productivity growth of more than 3 percent, nearly twice that of the overall nonfarm economy, which grew at 1.6 percent.

The strength of the U.S. economy during the last half of the 1990s was significantly supported by the IT-producing sector. Between 1996 and 2000, this sector represented between 8 and 9 percent of the economy, yet contributed nearly a third of the nation's 4-5 percent real annual output growth. In the recession year, 2001, the economy's weak 0.9-percent growth came almost entirely from the growth in the IT sector alone. As the rest of the economy began to pick up in 2002, however—reaching 2.2 percent—growth in the IT sector fell to a marginal 0.1 percent before starting to solidly grow again in 2003.

The strongest market segment remains consumer IT products. Business investment in IT equipment and software makes up the largest source of demand for hardware and communications equipment. Spending on IT equipment and software declined during 2001-2002, but rose through the third quarter of 2003 at a quarterly average of 2.3 percent.

U.S. leadership in both IT exports and imports speaks to the nature of a globalized world economy—where companies must invest in international production and distribution to be competitive in local foreign markets—and to the outsourcing of production and services. Finally, in IT services, the U.S. experienced in 2002 its sixth consecutive year of a trade surplus ($8.4 billion).