Is the Internet Better than Electricity?
& Zaki Wahhaj
Published: June 2001
This article looks at the economic impact of electrification in the United States to
gain insights about the possible consequences of today’s information
technologies. A close study reveals that electrification significantly raised
productivity growth by spurring a redesign of the optimal factory but, strikingly,
neither the firms producing the new technology, nor those using it, were able to
increase their share of profits in GDP. The authors conclude that even in the
unlikely event that the internet and IT matches electricity in economic terms,
the only unambiguous beneficiaries would probably be consumers who are able
to enjoy lower prices of goods and services and newer products.