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High technology firms are becoming a major U.S. economic force

SHARE High technology firms are becoming a major U.S. economic force

Sales by the computing and telecommunications industries have grown by 57 percent during the 1990s, to $866 billion, making those businesses an increasingly important force in the nation's economy, according to a new study.

The field of information technology - often defined as both computing and telecommunications - is the nation's largest industry, ahead of construction, food products and automotive manufacturing, the study concluded.The study, sponsored by the American Electronics Association and the NASDAQ stock market, which lists the shares of a large number of high-technology companies, represents perhaps the most comprehensive statistical portrait to date of what is called "the new economy" - populated by high-technology companies that generate new wealth, new work practices and new challenges in public policy.

The study, based on Commerce Department data, is titled "Cybernation: The Importance of the High-Technology Industry to the American Economy." A large part of the report's intended audience is in Washington, where a growing number of high-technology policy issues are being debated.

Those issues include whether to establish national educational standards, whether to relax export curbs on data-scrambling software, whether to impose special taxes on Internet commerce and whether to raise immigration quotas to allow more skilled workers into the United States.

The report also provides Silicon Valley with some useful intellectual ammunition as its entrepreneurial leaders increasingly yet uncertainly try to gain influence in Washington.

"Whether we like it or not, high-technology issues are going to be front and center in Washington and in state capitals during the next few years," said William Archey, president of the American Electronics Association, a trade group.

"At the state and national level, policymakers have a lot of positive impressions about the high-technology industry but often very little knowledge of it," Archey said. "The biggest public policy threat to the high-technology field is the ignorance of technology and of how these industries work."

The electronics group is being joined by a number of new high-tech-nology lobbying efforts. These range from the strengthened Washington presence of companies like Microsoft Corp. to the formation last summer of the Technology Network, a Silicon Valley group headed by John Doerr, general partner of the venture capital firm Kleiner Perkins Caufield & Byers, and James L. Barksdale, the president of Netscape Communications Corp.

So far, the younger computer companies have generally tried to promote their positions with small offices in Washington and without being big contributors to political campaigns. That approach is very different from the one favored by the other side of information technology, telecommunications, an industry that deploys corps of lobbyists and makes sizable political contributions.

President of the American Electronics Association, a trade group.

For purposes of the new study, telecommunications was grouped with computer hardware and software as a single field mainly because the technologies are so closely linked - and becoming more so, as the nation's communications system makes the transition to the digital technology of computing.

The high-technology sector, the study reports, generated 6.2 percent of the nation's output of goods and services in 1996 and employed nearly 4.3 million people. Workers in the field earn wages 73 percent higher than the average wage in the overall private sector, the report shows.

Productivity - or output per worker - in the high-technology field is also growing sharply. From 1990 to 1996, as high-technology revenues increased 57 percent, to $866 billion, the report said, employment rose 7.2 percent, to 4.26 million.

The revenue and employment figures in the study were assembled from the government's statistics, grouped by type of business, a system called the standard industrial classification, or SIC, codes. The study included sales and jobs data reported by companies in 45 of these industrial groups.

Using government statistics to define a field as broad as high technology is tricky. But some analysts say that the study's methodology was fairly conservative.

For example, the report excluded semiconductor manufacturing machines and electronic games because those two businesses fit into much broader SIC groupings; if they had been included, they would have bloated the overall information technology numbers.