THE SECRETARY OF COMMERCE

Washington, DC 20230

I am pleased to release Digital Economy 2000, the Commerce Department's third
annual report on the information-technology revolution and its impact on our
economy. Understanding sweeping economic changes as they are happening is a
formidable challenge. In government agencies and research institutions around
the world, analysts are trying to meet this challenge. Digital Economy 2000 is
an important contribution to this effort and a measure of its progress.

In the twelve months since our previous digital economy report, confidence has
increased among both experts and the American public that the new,
proliferating forms of e-business and the extraordinary dynamism of the
industries that produce information-technology products and services are
harbingers of a new economic era. For most economists, the key measure of our
new condition is the exceptional increase in productivity of the last five
years, which has helped drive a welcome combination of falling inflation and
very strong growth. For many people, however, the clearest evidence lies in the
extraordinary increase in the electronic connectedness among individuals and
businesses through the Internet. Three hundred million people now use the
Internet, compared to three million in 1994. They can access more than one
billion web pages, with an estimated three million new pages added every day.

These numbers do not tell the full story. We are witnessing an explosive
increase in innovation. Using open standards, people around the world are
creating new products and services that are instantly displayed to a global
audience. We are witnessing myriad new forms of business activity, such as
electronic marketplaces linking buyers and sellers in seamless global bazaars,
and changes in business processes from customer service to product design that
harness the new technologies to make businesses more efficient and responsive.

Nor are our numbers complete. Surveys by the Census Bureau, for example, now
measure business to consumer e-commerce or "e-tailing" and have begun to
measure business-to-business e-commerce. Hard questions of definition and
measurement will still have to be resolved, however, before we can understand
the full impact of these changes on our economy.

What we can see clearly are expanding opportunities. To meet these
opportunities, we will have to ensure a stable and conducive economic and legal
environment for continuing innovation in information technologies and
e-commerce. We need to encourage the building of a broadband infrastructure
that allows all Americans to have access to the advanced services that support
the Internet, and take the steps necessary with respect to privacy, consumer
protection, security, reliability and intellectual property rights that will
inspire confidence in the Internet. To realize the full potential of this
digital economy, every person and every business must be able to participate
fully and make their own unique contribution to its development.

William M. Daley