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The U.S. economy could boost GDP anywhere between $1.6 to $2.2 trillion by 2025 through maximizing the use of information and communications technology (ICT) across all sectors, according to the McKinsey Global Institute. This amounts to an increase of between 6 to 8 percent of the White House’s projected U.S. GDP of $28 trillion in 2025.
McKinsey estimates that the U.S. economy has only reached 18 percent of its digital potential. Their breakdown of the main drivers for potential GDP growth through further digitization include the following:
- Increased labor productivity will contribute $500 billion to GDP. Digital systems can match worker skills to employer requirements better and continued ICT adoption will generate more productive workers.
- More efficient use of ICT-enabled capital will generate between $250 to $400 billion in GDP. Through the Internet of Things, factory machinery equipped with sensors and other data gathering devices will optimize maintenance and operation schedules, reducing cost inefficiencies.
- At the economy-wide level, ICTs are estimated to improve GDP anywhere between $840 and $1,250 billion. Such improvements include advances in big data analytics, quicker R&D cycles, and more “intelligent” supply chains.
Read last week’s Innovation Fact of the Week.
