Dewan and Kraemer enter the debate on the macroeconomic impact of information technology (IT) investments on a national economy. This article shows that the actual impact of each additional dollar of IT investments produces a macroeconomic return on investment of around 70 percent. The paradox is that the Gross Domestic Product (GDP) of the US and other developed countries has failed to increase as the IT investments have substantially increased. The authors demonstrate that this paradox is caused by other factors (such as saturation of non-IT investments) that have limited the growth of the GDP.

The authors present an intricate and complex analysis of economic data from 17 developed countries and compare the data obtained from the period between 1985 and 1992 for a number of economic variables. While the analysis is quite complete, I would have liked to see a discussion of why 6- and 13-year-old data were used instead of more recent data. Also, an analysis of the impact of major trends in the computing world on IT investments would have helped in considering other possible influential factors. For example, the computing world in 1985 consisted of mainframes and terminals, while in 1992 the change to distributed PCs was about 50 percent complete. Did this have an effect on the macroeconomic impact of IT investments?

This article is important for anyone involved in the economic impact of IT investments, but others will find it difficult to read. A background in economics and in this debate is needed for easy comprehension of this article.