Service Sector in Today’s Information Economy

This paper measures the size and structure of the U.S. information economy in 1992 and compares them with Marc Porat’s measures for 1967[4]. It also examines the magnitude and growth of the information components of the service sector over the years. The results of this study highlight the importance of information in the U.S. economy. It also documents interesting facts about the growth and compositional changes of the information economy. The study indicates that the share of the information economy in total GNP grew from about 46 percent in 1967 to about 56 percent in 1992. It is interesting to note that while the share of service sector information activities in total GNP increased substantially the shares of non-service sectors declined. Finally this paper provides a critical evaluation of Porat’s methodology and suggests a few improvements to obtain a more accurate measure of the size of the information economy.