World Economic Outlook

The Information Technology Revolution

October 2001

©2001 International Monetary Fund
Ordering Information

The World Economic Outlook presents the IMF staff’s analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF’s global surveillance activities.


Use the free Adobe Acrobat Reader to view PDF files.

517k pdf Assumptions and Conventions
Chapter I.  
494k pdf file
Prospects and Policy Challenges

How Quickly Can Growth Pick Up in North America?

Japan: A Somber Short-Term Outlook, But a New Opportunity for Reform

How Serious is the Slowdown in Western Europe?

Latin America: How Will Argentina's Crisis Affect the Region?

Emerging Asia: Hard Hit by External Shocks

Emerging Europe: A Difficult Balance Between Short- and Medium-Term Objectives

Commonwealth of Independent States (CIS): Recovery Continues, But Reforms Lag

Africa: Support Growth and Poverty Reduction

The Middle East: Managing Oil Price Volatility

Appendix I: Primary Commodities and Semiconductor Markets

Appendix II: Alternative Scenarios--How Might Medium-Term Productivity Growth Affect the Short-Term Outlook?


  1.1   The Terrorist Attack: Impact on the Global Outlook
  1.2   How Much of A Concern is Higher Headline Inflation?
  1.3   An Historical Analogy to the Terrorist Attack on the United States: The Kobe Earthquake
  1.4   The Japanese Economic Slowdown and East Asia
Relative Euro-Area Growth Performances: Why are Germany and Italy Lagging Behind France?
The Growth-Poverty Connection in India
Economic Growth, Civil Conflict, and Poverty Reduction in Sub-Saharan Africa
  1.1   Overview of the World Economic Outlook Projections
  1.2   Emerging Market Economies: Net Capital Flows
  1.3   Advanced Economies: Real GDP, Consumer Prices, and Unemployment
  1.4   Selected Economies: Current Account Positions
  1.5   Major Advanced Economies: General Government Fiscal Balances and Debt
  1.6   Selected Western Hemisphere Countries: Real GDP, Consumer Prices, and Current Account Balance
  1.7   Selected Asian Countries: Real GDP, Consumer Prices, and Current Account Balance
  1.8   European Union Accession Candidates: Real GDP, Consumer Prices, and Current Account Balance
  1.9   Commonwealth of Independent States: Real GDP, Consumer Prices, and Current Account Balance
  1.10   Selected African Countries: Real GDP, Consumer Prices, and Current Account Balance
  1.11   Selected Middle Eastern Countries: Real GDP, Consumer Prices, and Current Account Balance
  1.12   Volatility Measures
  1.13   Potential Output Growth Rates in the Baseline
  1.14   Alternative Scenario: Faster U.S. Productivity Growth
  1.15   Alternative Scenario: Immediate Realization of Slower Productivity Growth
  1.16   Alternative Scenario: Gradual Realization of Lower Productivity Growth
  1.1   Global Indicators
  1.2   Selected European Union Countries, Japan, and United States: Indicators of Consumer and Business Confidence
  1.3   Global Output, Industrial Production, and Trade Growth
  1.4   Financial Market Developments
  1.5   Net Overseas Aid Disbursement by Major Development Assistance Committee (DAC) Countries
  1.6   United States: A Sharp Slowdown in the Business Sector
  1.7   Japan: Banking and Corporate Sector
  1.8   Euro Area: Weakening Growth, Rising Inflation
  1.9   Selected Western Hemisphere Countries: Overall Public Sector Deficit and Public Debt
  1.10   Selected Asia-Pacific Countries: Weakening Export Growth
  1.11   Emerging Europe: Export Growth
  1.12   Commonwealth of Independent States (CIS): Continuing Recovery But Disappointing Progress on Reform
  1.13   Selected African Countries: Sensitive to Commodity Markets
  1.14   Selected Middle East Oil Producing Countries: Fiscal Restraint Apparent
  1.15   OPEC Target and Actual Production of Oil
  1.16   Commercial Stocks and Prices
  1.17   Indices of Commodities
  1.18   Semiconductor Sales and Prices
  1.19   Illustrative Country Scenario: Productivity Uncertainty
  1.20   Impact of Changes in Productivity Growth
Chapter II.  
377k pdf file
International Linkages: Three Perspectives

Business Cycle Linkages Among Major Advanced Economies

How Do Fluctuations in the G-7 Countries Affect Developing Countries?

The World Trading System: From Seattle to Doha


  2.1   Confidence Spillovers
  2.2   Channels of Business Cycle Transmission to Developing Countries
  2.3   Potential Welfare Gains from a New Trade Round
  2.4   Critics of a New Trade Round
  2.1   Cross-Correlations of Output Gaps in Group of Seven (G-7) Countries, 1974–2000 and 1991
  2.2   Trade Interdependence in Group of Seven (G-7) Countries, 1974–2000
  2.3   Foreign Portfolio Assets and Household Wealth in Selected Group of Seven (G-7) Countries
  2.4   International Revenue Diversification of Listed Joint Stock Companies in the Group of Seven (G-7) Countries
  2.5   Countries Included in the Developing Country Aggregates
  2.6   Output Correlation with the Group of Seven (G-7) Countries
  2.7   Developing Countries: Determinants of Output Comovement
  2.1   Common Components in Group of Seven (G-7) Output Gaps
  2.2   Group of Seven (G-7) Countries: Selected Bilateral Output Gap Correlations
  2.3   Group of Seven (G-7) Countries: Asset Market Interdependence
  2.4   Group of Seven (G-7) Countries: Net Foreign Assets
  2.5   Group of Seven (G-7) Countries: Gross Foreign Direct Investment and Portfolio Flows
  2.6   U.S. Asset Markets and Group of Seven (G-7) Countries
  2.7   G-7 Equity Return Linkage
  2.8   Output Fluctuations in the Group of Seven (G-7) Countries and Developing Countries
  2.9   Output Comovement Between the Developing Countries and the Group of Seven (G-7) Countries
  2.10   Trace Developments in Developing Countries and the Cycle in G-7 Countries
  2.11   Developing Countries: Net Private Capital Flows
  2.12   Stock Returns Comovement Between the Developing and the Group of Seven (G-7) Countries
  2.13   World Trade and Developing Countries
  2.14   Number of Antidumping Investigations Initiatied
  2.15   Selected OECD Countries: Agricultural Producer Support Estimate, 1986–2000
Chapter III.  
345k pdf file
The Information Technology Revolution

Past All-Purpose Technological Revolutions

Labor Productivity Growth

Who Benefits—Producers or Users?

Business Cycle Implications

Prospects for the Information Technology Revolution

Policy Implications


  3.1   Measurement Issues
  3.2   Has the U.S. Total Factor Productivity Growth Accelerated Outside of the information Technology Sector?
  3.3   Information Technology and Growth in Emerging Asia
  3.4   Has the Information Technology Revolution Reduced Output Volatility?
  3.5   The Information Technology Slump and Short-Term Growth Prospects in East Asia
  3.1   Contribution of New Technology to Economic Growth
  3.2   Railroad Mileage, 1840–1920
  3.3   Social Savings from Railways
  3.4   Contribution of Information Technology (IT) to the Acceleration in Productivity in the United States
  3.5   Contribution of Information Technology Capital Deepening to GDP Growth in the G-7 Economies
  3.6   Contribution of Information Technology (IT) Activities to GDP Growth, 1990–98
  3.7   Illustrative Estimates of the Impact of Falling Prices of Information Technology (IT) Goods on GDP, Terms of Trade, and Domestic Demand
  3.8   Selected Economies: Indicators of Information Technology (IT) Use
  3.1   United States: Relative Prices of Information Technology Goods
  3.2   Information Technology Investment in the United States
  3.3   Information Technology (IT) Expenditure and Production
  3.4   Initial Phase of Technological Revolutions
  3.5   Demand for Information Technology (IT) Goods and Consumer Surplus
  3.6   Increase in Consumer Surplus, 1992–99
  3.7   Exports of Information Technology (IT) Goods
  3.8   Trade in Information Technology (IT) Goods
  3.9   Globalization of Information Technology (IT) Firms
  3.10   Stock Prices
  3.11   Information Technology (IT) Financing in Advanced Economies
  3.12   Short-term Debt to Book Value of Equity
  3.13   United States: Evolving Official Estimates of the Output Gap
Chapter IV.  
294k pdf file
International Financial Integration and Developing Countries

Trends in Capital Account Liberalization and Capital Flows

The Impact of International Capital Account Liberalization on Growth

Sequencing Capital Account Liberalization

Policy Considerations

  4.1   Measuring Capital Account Liberalization
  4.2   The Impact of Capital Account Liberalization on Economic Performance
  4.3   Foreign Direct Investment and the Poorer Countries
  4.4   Country Experiences with Sequencing Capital Account Liberalization
  4.1   Summary Studies on Capital Account Liberalization and Growth
  4.2   Openness of the Capital Account
  4.3   Liberalization and Economic Growth for Developing Countries
  4.4   Liberalization and Private Investment for Developing Countrie
  4.5   Liberalization and FDI Spillovers for Developing Countries
  4.6   Liberalization and Domestic Financial Development for Developing Countries
  4.7   The Benefits of Capital Flows from Stronger Institutions in the 1990s
  4.1   Gross Capital Flows
  4.2   Summary of Measures of Capital Account Openness
  4.3   Concentrations of Capital Flows: Largest Developing Country Users
  4.4   Per Capita Growth by Liberalization in Developing Countries
  4.5   Private Investment and Foreign Direct Investment (FDI) Inflows by Liberalization in Developing Countries
  4.6   Financial Development by Liberalization in Developing Countries
  4.7   Volatility of Net Capital Flows and Liberalization
  4.8   Growth by Volatility of Gross Portfolio Flows in Countries with Open Capital Markets
544k pdf file
Summing Up by the Acting Chair
  Statistical Appendix


Data and Conventions

Classification of Countries

List of Tables
   Output (Tables 1–7)
   Inflation (Tables 8–13)
   Financial Policies (Tables 14–21)
   Foreign Trade (Tables 22–26)
   Current Account Transactions (Tables 27–32)
   Balance of Payments and External Financing
      (Tables 33–37)
   External Debt and Debt Service (Tables 38–43)
   Flow of Funds (Tables 44)
   Medium-Term Baseline Scenario (Tables 45–46)
  A1   Economic Policy Assumptions Underlying the Projections for Selected Advanced Countries
187k pdf file World Economic Outlook and Staff Studies for the World Economic Outlook, Selected Topics,