If findings such as Lichtenberg's are accurate, the U.S. should be in the catbird seat once the global economy enters the broad cyclical expansion expected later this year and in 1995. For as economists Bruce Steinberg and William Sterling of Merrill Lynch & Co. observe, U.S. companies are far ahead of their European and Japanese rivals, not only in the radical restructuring inspired by heightened global competition but also in the development and deployment of information technology.
A McKinsey & Co. study, for example, found that in 1990, the U.S. had a strong productivity lead over Europe and Japan in manufacturing and services--a lead undoubtedly reinforced by continuing restructuring and heavy investment in computers. Recent surveys indicate that both U.S. businesses and the public make far greater use of information technology than do their counterparts overseas (chart).
The results are apparent in economic data. Steinberg notes that over the past decade, unit labor costs in the U.S. rose less rapidly than in Japan and Germany, even when measured in local currency terms. And U.S. capital-goods prices have also been falling faster, reflecting greater U.S. investment in computers.
In microchips, digital technology, and computer software, American companies now dominate world markets. Indeed, say Steinberg and Sterling, its comparative advantage in technology will probably allow the U.S. to remain the low-cost producer among industrial nations, even if the dollar appreciates. Meanwhile, the two economists point out that regulatory and bureaucratic roadblocks are likely to leave Europe and Japan far behind, as the U.S. moves rapidly forward to construct an Information Superhighway in the decade ahead.
In the late 1980s, note Steinberg and Sterling, business-equipment investment in Japan and Germany ran as high as 20% and 9% of gross domestic product, respectively, compared with only 7% in the U.S.--a difference that sparked widespread concern. If the Merrill Lynch economists are correct, America's smaller but more focused investment in information technology will soon begin to pay substantial dividends.