Amy H. I. Lee* and Chiu-Chi Wei**
Abstract
Computers have become an integral part in our everyday life. Almost everyone takes it for granted that computers can raise our standard of living and productivity in our workplace. However, the investment in information technology is enormous and can never catch up with the trend of new technology. On top of that, some people begin to have doubts about the productivity that can be derived from information technology. This article investigates the pros and cons of the proposition as to whether computers can increase productivity.
Keywords: computer, productivity, automation
1. Introduction
For the past quarter century, people have witnessed the evolution of computers from large, cumbersome workstations to small, intelligent notebooks. There seems to be less and less jobs that cannot be done by computers. Almost every government and business around the world believes that computer information technology is the key to the future and has invested amounts of money in this venture. However, at the same time, more and more people are skeptical about the benefits of the increasing investment of information technology. If no concrete gains can be seen, there is no way to trust our future to it. To be realistic, the governments and businesses expect to see benefits and returns from their enormous investment. The first question we have to ask is, “Can information technology raise productivity?”
From the economic point of view, whether a country can continuously increase living standard of every household and a business be outstanding from all other competitors depends on the raise of productivity. From the introduction of computer information technology and application, people have been brainwashed by propaganda about its importance, and today almost everyone believes that information technology equals to productivity. Many economists and business academics also indicate that information technology and information industry have become pioneers in economic development in developed countries. In addition, information technology specialists optimistically believe that from Moore’s Theory they can conclude that the operational ability of microprocessor every dollar spent on can be doubled in every eighteen months, and they presume that efficiency and productivity must have positive correlated growth at the same time.
The opponents are cynical about the above statements since empirical studies cannot justify the significance of information technology in economic development. In addition, the spending in computers by governments and businesses is in fact magnified while the relation between information technology investment and productivity is in doubt. The statistics shows that in the past 30 years the investment in computer information equipment by the seven largest industrial countries has increased tremendously. However, the productivity of these countries has lagged; the average growth in productivity a year has decreased from 4.5% in the 1960s to 1.5% in the 1990s. Especially in the 1990s, the economic growth in developed countries is mainly due to the increase in working population, expansion in production capacity and international trade. There is no indication that information technology is a pioneer in economic development; in contrast, only the spending is increasing more and more.
2. Investment of Computer
In 1996, U.S. enterprises spent a total of 21.3 hundred billion dollars on information hardware, which is 43% of total capital expenditures in the States. This tremendous amount is much more over the total investment in machinery and all other durable equipment. An estimate of over $50 hundred billion U.S. dollars were spent on information soft and hardware, internet, human support and training in the States in 1996; and around one trillion dollars were spent for the whole world. With this huge investment, productivity however is not increasing proportionally. Compared to other inventions such as waterpower, steam machine, electricity that had led to productivity revolution for the mankind, information technology, many economists criticize only costs a lot and have very few benefits. Its most important attribute is the hiring of information-related personnel to the organizations and governments, and thus maybe the increase of employment rates.
The two main purposes of businesses in investing information technology are to reduce manpower and expenses in production and to increase production output and product value. To increase productivity, many enterprises promote automation. However, until today automation are usually on those low value-added activities such as processing and transaction records handling. For the main economic activities such as sales, management and professional tasks, the performance of information system is disappointing. And even worse, automation does not save a lot of manpower, and many information-related professionals are hired. The outcome is that those unskilled workers are laid off and are very difficult to find new jobs. This causes unemployment problem in the economy. On the other hand, enterprises, in order to coordinate with automation, need to compete with others for information professionals and thus bid up their salaries. Unfortunately, these high-pay professionals are not necessarily suited for their jobs and may even deter businesses from automation.
3. Performance of Computer
In terms of informationization being promoted by many enterprises to increase the productivity of office works, the research shows that the working time of white-collar workers has increased, and the expected trend of working hours is rising too. The reason is that a very big portion of the time is spent on non-productive information-related tasks such as learning the functions of software, solving the problems of computers or internet, and helping colleagues to figure out computer problems. In addition, a very ironic thing is that more and more people may spend a whole day on computers just to prepare a fancy document. This explains why a lot of people need to work overtime, but the productivity is not increased.
With large investment in information technology, there are supposed to be a lot of benefits to the enterprises and economy. Unfortunately, most investment is wasted in the upgrading of computers and accessories. For example, usually new generation of computers is introduced in less than two years, and new version of software is put on the market very frequently. This becomes a vicious circle: organizations invest a lot of money in upgrading the equipment, employees spend a lot of time in getting familiar with the new equipment and software, and these organizations also need to spend more resources in training and hiring more information specialists. And all of these do not really help the production activity.
4. Debates on Information Technology
Whether information technology can raise productivity has become a controversial issue as more and more money is invested in it. Standard of measurement, level of informationization, time lag, and information technology are four areas that are often debated on. In terms of standard of measurement, those who believe information technology indeed raise productivity point out that current economic and statistical model cannot correctly measure the contribution of information technology; for example, consumer satisfaction, working quality and product variety cannot be quantified. On the other hand, the opponents debate that the measurement tools could reflect the contribution of new technology in productivity in the past. The growth in productivity has decreased noticeably in the past three decades, and this cannot simply be explained by the bias of statistical tools. In terms of the level of informationization, proponents argue that the reason productivity cannot be reflected by information technology investment is because the level of informationization in all industries has not reached the point of total productivity escalation. Opponents however criticize that information investment has already taken up more than 40% of total capital investment in industries, and if this amount is still insufficient in raising productivity, none can guarantee that more investment is the key to productivity.
In terms of time lag, advocates explain that the revolutionary change in industries brought by motors was evident 40 years after its invention; likewise, information technology is still in its introduction era and its effect will be seen given time. However, contenders indicate that compared to the wide spreads of motors after 40 years of its invention, computers have been widely accepted several years ago.
The last area of debate is the information technology itself, proponents appeal that the application of information technology in raising productivity is not good enough, and as a result, its effect is not obvious. This problem, given time, can be solved. Opponents point out that even though new technology cannot become mature instaneously, information technology, which has been developed over thirty years and still cannot show its advantages, must be fully examined.
5. Conclusion
It is apparent for almost everyone that information technology has saved us time and effort and has increased productivity in every way. At the same time, there is no doubt that investment in computers is never enough. Whether information technology can improve productivity thus becomes an issue for debate. Unfortunately, present measurement systems are inadequate in determining the real performance of computers, and improved financial numbers and non-financial indicators of productivity are required to end this war. In addition, application of information technology in higher value-added activities instead of routine, low-skilled-demanded jobs is recommended to truly improve its productivity.
References:
- C. C. Lee, “Does Computer Really Improve Productivity,” China Time, 1997.
- E. Foster, “Enterprise Computing,” Infoworld, October 15, 1990.
- S. Strijbos, “The Paradox of Uniformity and Plurality in Technological Society,” Technology in Society, Vol. 19, No.2, pp.177-194, 1997.
