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THE ROLE OF INFORMATION TECHNOLOGY IN THE SPHERE OF 
ECONOMY DEVELOPMENT 
 
Z.T.Jabborova (Tashkent state institute of oriental studies 
Teacher of the Department of English Philology) 
Human society is at the genesis of a revolution that will make the industrial revolution pale 
in comparison. The information age is finally declaring itself loud and clear. If one were to look 
up "information age" in a 1986 set of World Book Encyclopedia, there would be no hint of 

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information technology, an Information revolution, or an Information Age. Will this be the case 
in the year 2006? Probably not, although most encyclopedias will be on some digital medium in 
2006, these terms will be discussed, and they will be conveniently located alphabetically following 
the industrial revolution.
Information Technology (IT), will certainly influence many aspects of society, but one area 
of particular interest is that of the economy. This will be the main topic of discussion in this paper. 
The information age has been ranked by many to be the next developmental stage following the 
industrial revolution. First, by looking at the evolution of economics in society, this claim will be 
substantiated. Second, the rapidity of changes occurring in the economy will be explained by 
providing an understanding of information and it relationship to technology. Once this foundation 
has been established, secondary research will be presented regarding IT's impact on the economy 
at a macro, enterprise, and global level. This research will be presented in light of this foundation 
The economy is the institutional means by which goods and services are produced, 
distributed, and consumed. Goods range from necessities (things you must have to continue living) 
to luxury items. Services also have a large range, being that any activity that benefits others is 
considered to be a service. The complex economy that we have today has evolved from a 
preindustrial society. It took years and years of technological innovation and social change to 
derive into the postindustrial society of today. In the hunting and gathering 
preindustrial society, production, distribution, and consumption of goods took place among 
family and group members. Economy was "limited within the bounds of kinship" . As time went 
on, people invented tools that, with animal power, could assist in the production of food. This 
allowed people, who normally had to hunt and gather to survive, to assume specialized economic 
roles and now there would be more potential for services and luxury goods. This era is considered 
the agricultural revolution. 
In the mid-eighteenth-century technological innovation brought another revolution. The 
industrial revolution introduced changes in the economies of Western societies. With the invention 
of the steam engine, material goods could be produced by machines instead of by the physical 
labor of humans and animals. The spread of factories made cottage industries obsolete. The mass 
production of factories began to focus on turning raw material into a wide range of saleable 
products. Unlike workers in a cottage industry, who made their products from start to finish, 
factory workers were highly specialized. Last, the industrial revolution brought people working 
for
themselves to become wage laborers. 
Industrialization is an ongoing process. As industrialization prevails, economic activity 
centers on service work and high technology. By the mid-twentieth century, this lead to the 
postindustrial society. Computer technology created an information revolution. Computers 
changed the location of work from factories to specialized jobs at home on personal computers. 
The modern economy of today has a shifting balance of characteristics that combine economies of 
the past. There are three sectors of a society's economy. The primary sector of economy, generating 
raw materials from the environment, dominates preindustrial societies. The secondary sector, 
creating manufactured goods from raw materials, prevails in industrial societies. The tertiary sector 
makes up the segment of the economy generating services rather than goods and
is dominant in postindustrial economies.
So why does IT deserve to be compared with the industrial revolution? It is because IT is 
dramatically increasing the rate of change in the economy 
Low interest rates may be the main reason for the economy's recent growth, but it would be 
unfair to overlook the role that information technology plays in saving energy. Many buildings are 
currently being built with smart lights that turn off when no one is in the room. Computer monitors 
can be set to turn off automatically when they are not being used. Those are just examples that are 
easily recognized, but there are so many more that may not come to mind. For example, the 
computer chips that are being put into automobiles are programmed to maximize fuel efficiency. 
There are many more examples, but results are substantial. 

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Recent studies indicate substitutability between energy and information in the so-called 
information economies. These studies suggest that information in general and information 
technologies in particular have the potential to save energy. . . The development of information 
activities in the US economy was studied from 1963 to 1987 and the contribution of information 
to save energy is indicated. Results show an increasing presence of information activities in all 
segments of the economy and strong evidence of their contribution to energy savings. (Machado 
and Miller) 
Many factors contribute to growth in productivity besides that of Information technology. 
Output is a function of a multiple inputs and technology, the latter affecting how inputs are 
combined in production. Other capital investments also effect productivity. For example, buildings 
for retailers or an airplane for airline companies. The following observations were made by a 
Committee who studied the impact of information technology on the performance of service 
activities: The fact that over the past 15 to 20 years of slow growth in productivity has been 
accompanied by rapid investment in IT has suggested to some people that the use of IT has actually 
caused the slowdown in productivity growth. But it is a mistake to conclude that IT is the culprit
8
. 
It surely is in some cases, but in others it has probably made a large positive contribution. The key 
point is that the currently available macroeconomic data cannot precisely measure how 
investments in IT alone are influencing productively in the services . . . the committee's findings 
have led it to make the following observations about current macroeconomic data on service-sector 
productivity and how investments in and the use of IT have influenced these data. 
Information technology makes it possible to transfer large amounts of precise information 
to almost anywhere in a relatively short period. IT facilitates the transaction of money through 
electronic means in a fast and secure manner. There are ATM machines located throughout the 
world that will immediately give you your money in a local currency at the current exchange 
rate.IT is what makes a real-time global economy possible
Information technology is also likely to raise the bar of global competition and require new 
policies that encourage flexibility in the economy . . . In the global economy, lower distance costs 
are facilitating integration in traditional industries, i.e., increasing trade as a proportion of GDP. 
For example, corporations are increasingly hiring or subcontracting with computer programmers 
in India and the Caribbean. That kind of work is enabled by the fact that one can send back the 
output from the day's coding, if necessary, to the headquarters program managers for feedback. 
Magazine subscription lists can be managed from the Caribbean. Medicalclaim forms can be 
processed in Ireland. 
IT therefore heightens the intensity of global competition. Companies, industries or 
countries will be quicker to rise or quicker to slide depending upon their international 
competitiveness. In addition, this greater competition will improve productivity and raise global 
real GDP growth.