Group calls for digital infrastructure stimulus

A $30 billion investment in information technology in a government-led economic stimulus package would create about 949,000 U.S. jobs, according to a new report from the Information Technology and Innovation Foundation.

A $10 billion investment in broadband over a year would yield 498,000 new or retained jobs for a year, a $10 billion investment in health information technology over a year will create 212,000 jobs for a year and a $10 billion investment in smart power grids over a year would create 239,000 jobs for a year, the report states.

A significant share of the job creation is the result of an economic “network effect,” which magnifies the impact of the spending because it spurs investment in related areas, wrote authors Robert D. Atkinson, Daniel Castro and Stephen J. Ezell. The network effect accounts for about half the job creation related to broadband networks, and about a quarter of the jobs for health IT and electric grid stimulus spending.

The network effect of IT-related investments is stronger than the impact that would result from the same amount of spending for traditional investments such as roads and bridges, the authors assert.

“Building out an IT-based network like broadband, health IT or the smart power grid leads to new jobs generated by upstream investment in industries that create new and innovative applications and services to take advantage of the more robust IT network,” the report stated. “For example, building something like the smart power grid will spur a host of innovative new products and services from hybrid plug-in electric vehicles to smart appliances to more investment in renewable energy. Public expenditures (either through grants or tax incentives) to support building out a network that already exists and is using relatively mature technology, on the other hand, will not yield comparable network effects.”

IT investments also are effective in boosting long-term economic growth, international competitiveness and improvements in U.S. quality of life, the authors wrote.

On Jan. 15, House Democrats presented an $825 billion stimulus package that contains $20 billion for health IT, $11 billion for smart electric grids and $6 billion to expand broadband networks to rural and underserved areas.