A saga of lost productivity
it is a common belief that computers and telecoms have been playing a major role in accelerating economic growth. The mindboggling investment by companies in the us on computers and telecommunications further proves the necessity of information technology in recent times. Yet, if official figures are to be believed, the computer revolution has not made the economy more efficient. The decline in annual average rate of productivity growth in America's business sector from 2.6 per cent in 1960-73 to nearly one per cent in recent times, has become a matter of debate for economists.
According to Paul Strassmann, the author of a recently published book, "The Squandered Computer', the investment on information technology has been a waste. He says that many companies purchase computer systems without knowing how to use them properly. The author does not find a correlation between spending on information technology and profitability in any industry.
The argument is acceptable to a certain extent. Most of the firms have been found to make unwise investments in computers. Due to irrational decisions, most of the companies have not been able to achieve desirable benefits. This productivity paradox