From...

May 27, 1999
Web posted at: 3:22 p.m. EDT (1922 GMT)

by Maryann Jones Thompson

(IDG) -- At the first-ever government conference devoted to measuring the economic impact of information technology, federal beancounters were the first to admit that current indicators don't work.

"The way government collects key economic performance indicators has to change," said Commerce Secretary William Daley during his keynote address Tuesday. He pointed out that until last year, computers were still classified as "nonelectrical machinery" according to regulations set up during the days of Franklin D. Roosevelt. "The old pigeon holes don't work anymore, and to be frank, we have to run to catch up with our colleagues on the private side."

Over 500 attendees crammed the wood-paneled main auditorium of the Commerce Department for the opening day of "Understanding the Digital Economy," hosted by the White House National Economic Council, the National Science Foundation and what Daley says "some of us are trying to turn into the Department of E-commerce."

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Daley was equally frank in his assessment of the data available from corporate America. "More and more people in the private sector are making what amount to billions of dollars of decisions about e-commerce, and they are doing it without reliable data," he said.

The conference agenda covers a broad range of Internet-related economic, social and organizational topics, ranging from a macroeconomic discussion about the Net's impact on productivity to ways to ensure that every American has access to the Web. By parading more than 30 academic, policy and industry experts past the speaker's podium over the course of the two-day event, organizers hope to find the gaps in the existing patchwork of statistics about the global digital economy.

Retail-sales indicators provide good examples of what the government is up against. The Department of Commerce recently announced that starting in 2000 it would include e-commerce revenues as part of the retail-sales census. The problem is that historically, retail-sales data has been gathered only from companies whose primary business is retailing. This classification makes sense for Amazon.com but not for Dell Computer -- historically, a manufacturer -- nor for an auction service like eBay. In addition, the government has never tracked the way a retail sale is made -- for instance, whether via a salesperson, a catalog or a Web site.

Other data-gathering priorities include proper accounting practices for technology investments, better numbers for the ever-expanding service sector, improved ways of defining the Internet Economy.

"A large conceptual challenge is to estimate a stable reference point that still makes sense five years from now on the Internet," says Robert Shapiro, undersecretary of commerce for economic affairs. "It's hard to know where changes are going to take you when you're in the middle of them."

Daley announced that an update of last year's "Emerging Digital Economy" report would be released in the next month and that because of the sector's growing importance, the report will be published annually from now on. Last year's report found that one-third of America's economic growth came from information technology and that the declining prices of these products had helped lower overall inflation by 1 percent or more.

Daley hinted that the forthcoming report held good news, as well; however, he was quick to point out that Net retail sales are still less than 1 percent of overall retail sales and that business-to-business commerce amounts to less than 1 percent of the $9 trillion U.S. economy.

The full text of the conference agenda and speakers' papers are available at www.digitaleconomy.gov (link below). Although the Department of Commerce is demonstrating cutting-edge use of Net technology by streaming the conference live from its site (link below), its online registration program didn't work as smoothly.

Several attendees grumbled that organizers lost the record of their Web-based registrations. A Commerce Department spokesman says that although most Web registrations got through, some may have been lost due to excess demand. Welcome to the Internet Economy, Uncle Sam.