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Effects on the economy

Information systems are a major tool for improving the cost-effectiveness of societal investments. In the realm of the economy, they may be expected to lead to higher productivity, particularly in the industrial and service sectors--in the former through automation of manufacturing and related processes, in the latter through computer-aided decision making, problem solving, administration, and support of clerical functions. Awareness that possession of information is tantamount to a competitive edge is stimulating the gathering of technical and economic intelligence at the corporate and national levels. Similarly, concern is mounting over the safeguarding and husbanding of proprietary and strategic information within the confines of organizations as well as within national borders. Computer crime, a phrase denoting illegal and surreptitious attempts to invade data banks in order to steal or modify records, or to release over computer networks software (called a virus) that corrupts data and programs, has grown at an alarming rate since the development of computer communications. In worst-case scenarios, computer crime is capable of causing large-scale chaos in financial, military, transportation, municipal, and other systems and services, with attendant economic consequences.

The growing number of information-processing applications is altering the distribution of labour in national economies. The deployment of information systems has resulted in the dislocation of labour and has already had an appreciable effect on unemployment in the United States. That country's economic recession during the early 1990s saw thousands of middle-management jobs relinquished, most permanently. The growth of computer-based information systems encourages a change in the traditional hierarchical structure of management (see below). As heavy automation is reverting production facilities from the labour-intensive nations to industrialized countries, the competitive potential of some of these nations is also likely to suffer an economic setback, at least in the short run. Singapore, a city-state of some three million people, has become very prosperous as giant foreign electronic firms located their manufacturing facilities there. It is bracing against such an economic setback by seeking to become the world's most intensive user and provider of electronic information systems for public services, international commerce and banking, and communications.

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