Editor’s note: The Software & Information Industry released a report this week spelling out the growth of the U.S. information-based economy. The report, titled “Software & Information: Driving the Global Knowledge Economy,” also spells out challenges that must be dealt with in terms of education, regulation, innovation and other areas. The conclusion of the 48-page report is reprinted in its entirety with the permission of the SIIA.

WASHINGTON, D.C. – The software and information industries are critical to growth for the U.S. economy. While innovation in these sectors is helping the U.S. continue as a global leader, there is little room for complacency.

Sustaining the significant economic and job gains delivered by the software and information industries — and realizing new growth opportunities both in the United States and internationally — will depend on many facilitating factors.

Perhaps most important is the ability to maintain an environment in which new and innovative products and services can emerge through the evolution of the following domestic and international regulatory and legal frameworks and the reduction of trade restrictive barriers:

Education, Training and a Highly Skilled Workforce

Human capital is critical to the innovation process. Access to skilled personnel is the fuel driving the software and information sectors’ progress. Over the next decades, the nation’s software and information industries will need many highly educated technical workers to develop and design new products and services, as well as effective leaders and creators of new businesses.

At a minimum, the U.S. education system at all levels must further act on the national consensus that our educational system needs to improve its science, technology, engineering and math education, including imparting problem-solving abilities, technology literacy and communication skills. These improvements are needed for the nation to keep pace with increased workplace and societal demands, as well as educational advancements in other nations. Achieving this goal will require a long-term investment in and re-orientation of our higher education system that can meet the growing demand for producing world-class graduates in math, science and technology.

Our nation must recognize that it is competing for the best in skilled talent with other countries that want to be globally competitive. How the United States addresses the shortage of qualified personnel and restrictions on the immigration of highly skilled workers will have a profound impact on the American economy and U.S. competitiveness.

A Regulatory Model Recognizing New and Evolving Business Models

The Internet’s advance is rapidly transforming the production, marketing and distribution of software and information, and the regulatory environment has been unable to keep pace with these rapid changes. Governments have been challenged to address the vital issues of privacy, security and taxation. Regulations must continue to be based on the least-restrictive approach, refrain from choosing one business model to the exclusion of others and, wherever possible, rely on meaningful self-regulatory compliance efforts that build confidence in the marketplace.

Dissolving Barriers to Cross-Border Trade

The ability to distribute software and information products electronically rather than through traditional physical media challenges the traditional approaches to trade facilitation. What is unchanged, however, is the essential need for effective market access and a reduction in cross-border trade barriers.

The goal, through meaningful trade policy as well as multilateral, bilateral and regional trade initiatives, is to ensure continued, full-market access for U.S. software and information products, without bias to whether they are delivered, distributed, used or transported in physical or electronic form. Products delivered electronically must not lose market access and other protections currently enjoyed by products traded on physical carrier media. Similarly, electronically transmitted products should not be subject to additional barriers or burdens simply due to their medium of distribution. New, more-efficient online business models should not be disadvantaged in the marketplace by discriminatory differences in trade treatment.

As such, United States trade policy should:

• Affirm that electronically delivered products receive treatment no less favorable than their physical equivalents
• Avoid trade restrictions that would discourage or prohibit products delivered, used, distributed or transported electronically as an alternative to physical delivery of the product
• Ensure a comprehensive scope with no digital products or sectors excluded
• Establish legally binding, permanent, duty-free treatment for all electronically transmitted products

Strong Intellectual Property Protection

The U.S. software and information sectors depend on a meaningful international framework for the protection of our industry’s intellectual property, including its copyrights, trademarks and patents.

According to the fourth annual Business Software Alliance (BSA) and IDC Global Software Piracy Study, 35 percent of the software installed in 2006 on personal computers (PCs) worldwide was obtained illegally, amounting to nearly $40 billion in global losses due to software piracy.39 Additionally, according to Outsell Inc., information is improperly forwarded at least 56 billion times per year, just by U.S. corporate workers alone.

In large markets, such as China, India, Brazil and Russia, enormous efforts are required to create a legal framework and meaningful enforcement regime that not only deters infringement, piracy and counterfeiting but that also encourages local investment and employment.

Continued Advances in Computer Access and Broadband Penetration

Broadband penetration is critical to the delivery of and access to increasingly sophisticated digital information products and software applications, either through high-speed Internet connections or wireless networks. While the United States has been an innovative path breaker in the digital age, U.S. leadership is slipping when it comes to broadband penetration.

The U.S. ranked only 15th among the 30 OECD countries for broadband access per 100 inhabitants in December 2006, behind such countries as Denmark, Korea, Sweden, France and Japan. The U.S. must continue to maintain strong broadband penetration and unrestricted access to rich Internet content.

Conclusion

If these and other issues can be addressed, the future global digital landscape holds great promise for the software and information industries. As the global knowledge economy continues to develop, businesses, governments and individuals around the world will adopt new habits and generate new demands for software solutions and digital information content and services.

As the data and growth projections underscore, U.S. companies in the software and information industries are performing consistently well. These dynamic industries have made important contributions to U.S. GDP growth relative to their size and have added tens of thousands of high-wage jobs for American workers, while other industries are contracting.

The software and information industries have a bright future, because competition in the global knowledge economy requires accurate and timely information and because technological changes lead to new and better products and methods for distributing them.