The Development of Information Technology Industry

1. For such of actions that certain developed nations progressively moved them

production offshore and also outsourcing from manufacturers in developing nations, the reason of those actions is due to the cost of importing the components from developing nations is cheaper than producing such components in developed nations. The international theory may be described as comparative advantage theory. David Ricardo (1817) mentioned comparative advantage theory that it makes sense for a country to specialize in the production of those goods that it produces most efficiently and to buy the goods that it produces less efficiently form other countries. That means a nation can product the components at lower cost than other nations. And developed nation's manufacturers are only focus on producing the highest value components, and developed nation's manufacturers are focus on producing the basic components.

Because of the production cost was decreased, computer hardware companies had surplus capital to invest in other information technology developments and improvement. Also the low unit price of final product would result in increase the sales volume and demand in the United States. The economy of developed nations would grow at a faster rate because the production of information technology was changed to developing nations.

Some of basic hardware components were outsourced to foreign manufacturers, the foreign manufacturers would join a favorable balance of trade. Then developed nation's manufacturers were producing the final product and arranged the trade with foreign countries that made the export higher than the import during 1990s-2000s. Productivity of a major manufacturers grew as reduced a unit price of information technology hardware. Also an increase in sales was developed the economic development and resulted in accumulated a huge gross domestic product(GDP). That means if such of information technology manufacturers improves its quality or function, then GDP in developed nations will also be raised.

In addition, such of moving the production of hardware offshore increased the job opportunities of developed nations. The improvement of information technology was resulted a high demand of related industries and created a lot of related jobs, such as computer software engineers and other relative based services. The unemployment of those developed nations would be reduced and also improved a great contribution to its economy. The implications of this trend for economic growth in developed nations are they were obtained the advantage to produce more technical products and upgrade their technology skills during this period.

Finally, the profit was moved offshore when developed the production of hardware components in other countries. When the developed nations want to the profit backed to their nations, it is difficult to arrange under the government’s policy in each nation.

2.  In the 1980s, personal computers and the innovations of companies like Intel, Apple, Dell etc which helped to develop the mass market for the information technology product. However, such companies started to move the production of commodity components such as dynamic random access memory chips (DRAMs) to low-cost producers in Japan, Taiwan and Korea' manufacturers. They just keep to produce the highest value components, such as the microprocessors and in final assembly. This situation implicates that US local manufacturers were producing the final product and carry out international trade. The cost of the final product(computer) can be decreased by such of offshore and outsourcing behaviors. As the cost is down, the unit price of product can be reduced. And the demand for such computers was also increased by other nations during 1990s-2000s. Information technology also contributed to economic growth through the promotion of international trade. The adoption of information technology, while further enhancing the international competitiveness of U.S. industrial products, also contributes to the elimination of trade barriers. U.S. uses this comparative advantage to reduce costs and get more profits.

According to David Ricardo (1817) mentioned comparative advantage theory that it makes sense for a country to specialize in the production of those goods that it produces most efficiently and to buy the goods that it produces less efficiently form other countries. That means a nation can product the components at lower cost than other nations. Information technology industry is promoting the U.S. economic growth. The information technology industry has led to the long-term growth of U.S. after World War II. The development of information technology industry has promoted the upgrading of the whole of industrial structure in U.S. It not only to create its own output value increased year by year. But also upgraded the information and high technology of traditional industry. Finally become the pillar of the U.S. economy.

With the development of information technology industries, information technology is widely used in other industries. With this consequence, the traditional industry carried out a large-scale restructuring and transformation, streamlining institutions, a large number of layoffs, improve the labor productivity effectively. In such of the industrial restructuring, the information technology industry was born 71 million jobs, a large number job of information technology was in short supply. The information technology industry has brought low unemployment in U.S. and the employment rate has continued to rise.

The development of information technology industry has inhibited inflation. There are three reasons for the low inflation rate: first, the rapid decline in the price of information technology products can inhibited inflation effectively; second, the application of information technology also promoted the productivity of other industries were greatly improved, resulting in lower production costs. Product prices also naturally be declined which able to inhibit inflation; Third, the promotion of globalization of information technology, trade barriers gradually eliminated. The competition of commodity became more intense. Each companies and their competitors can obtain information technology in the same way, all of those companies must also take measures to reduce costs, and thus inhibited the price.