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Notes:

¹ Over 30 years after the introduction of minicomputers and more than 20 years after the introduction of microcomputers, the mainframe remains an important category. Total worldwide revenues of large-scale computer processors (or mainframes) amounted to $16 billion in 1997 compared to $16.2 billion in 1982. But because total demand grew from $38 billion to $183 billion, mainframes' share of the total computer market dropped considerably, from 42% to about 9%. (Bhide 2000)

² Innovations that created markets for new goods and services gave lie to predictions that mechanization and mass production would create mass unemployment. Productivity improvements on the farm reduced agricultural employment in the U.S. from 11.7 million in 1900 to 5.9 million in 1960. Changes in production technologies also put many highly skilled artisans out of work. But, total employment more than doubled - from 29 million in 1900 to 68 million in 1960. The labor released by the farm and workshop was quickly absorbed by factories established to serve new markets (and the increased demand for old goods). The assembly line worker also earned more than the farmer or skilled artisan. For instance by 1900, the average annual manufacturing wage was more than twice the agricultural wage and this gap continued to widen through the first seven decades of the 20th century.

Products that satisfied new wants also created jobs in new service industries. Refrigerators and air-conditioners had to be transported, advertised, sold by a new kind of retailer, installed and periodically serviced. The transportation, advertising, retailing and other such 'service' industries in fact created more jobs than the manufacturing sector. As early as 1920 - long before the term the 'service economy' had been coined - employment in trade, transportation and other private service providing sectors was 15% greater than in the manufacturing. By the end of the 1960s, employment was nearly 70% greater.

Although wages in the manufacturing sector stagnated after the 1970s, and manufacturing jobs topped out at about 20 million in 1980, overall employment and incomes in the U.S. continued to rise. T

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Table 3: Ratios of IT expenditures to GDP, and gross fixed investment (GFI) to GDP, where US ratios =100

<table><thead><tr><th rowspan="2">Region</th><th colspan="2">2001</th><th colspan="2">2002</th><th colspan="2">2003</th><th colspan="2">2004</th></tr><tr><th>IT Ratio</th><th>GFI Ratio</th><th>IT Ratio</th><th>GFI Ratio</th><th>IT Ratio</th><th>GFI Ratio</th><th>IT Ratio</th><th>GFI Ratio</th></tr></thead><tbody><tr><td>United States</td><td>100</td><td>100</td><td>100</td><td>100</td><td>100</td><td>100</td><td>100</td><td>100</td></tr><tr><td>Canada</td><td>90</td><td>121</td><td>90</td><td>130</td><td>90</td><td>130</td><td>88</td><td>126</td></tr><tr><td>Latin America</td><td>83</td><td>116</td><td>89</td><td>123</td><td>93</td><td>120</td><td>98</td><td>121</td></tr><tr><td>Western Europe</td><td>83</td><td>123</td><td>81</td><td>129</td><td>81</td><td>127</td><td>84</td><td>122</td></tr><tr><td>Central/Eastern Europe</td><td>98</td><td>139</td><td>105</td><td>144</td><td>90</td><td>143</td><td>83</td><td>134</td></tr><tr><td>Middle East and Africa</td><td>64</td><td>118<sup>a</sup></td><td>68</td><td>133<sup>a</sup></td><td>76</td><td>133<sup>a</sup></td><td>81</td><td>123<sup>a</sup></td></tr><tr><td>Japan</td><td>71</td><td>152</td><td>74</td><td>155</td><td>84</td><td>152</td><td>87</td><td>143</td></tr><tr><td>Asia/Pacific</td><td>83</td><td>175</td><td>85</td><td>193</td><td>88</td><td>200</td><td>88</td><td>198</td></tr></tbody></table>

a For MEA Gross Fixed Investment, calculation is the weighted average of two regional aggregates provided by EIU: "Middle East and North Africa" and "Sub-Saharan Africa"

Source: IT spending estimates from Gartner Dataquest Market Databook for December 2005 and December 2003, GDP data from World Development Indicators Online, Gross Fixed Investment to GDP ratios from EIU database.

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