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Tech investments part of global stimulus efforts

In face of protectionist pressures, G20 nations continue to invest in technology.

A worker repairs cables on an electric power pylon in Huai'an, China, April 24, 2008. The Chinese have indicated that modernizing their electric grid will be a national priority. (Patty Chen/Reuters)

SAN FRANCISCO — The world's largest economies have responded to the financial crisis by including substantial investments in technology as part of their stimulus efforts.

Technology is increasingly seen as an engine driving competitiveness and economic growth in a world struggling through the deepest recession since the 1930s.

But concern is on the rise that the reaction against globalism could tempt governments to pursue protectionist policies at odds with knitting national economies more closely together through trade, migration and technology.

In a report titled, “Driving a Digital Recovery,” the Information Technology and Innovation Foundation in Washington looked at more than $100 million in technology spending by the G20, which is made up of 19 of the world's largest national economies plus the European Union. These nations are responsible for a combined $2 trillion in stimulus programs.

“When you invest in information technology you get a larger bang for your stimulus buck,” said report co-author Scott Andes, a research analyst with the foundation. Andes said technology investments not only create jobs immediately but also enhance long-term growth by improving the critical infrastructure of the knowledge-based economy.

“To be competitive 10 to 15 years from now the G20 are going to need things like universal broadband, computerized medical records and smart (electric) grids,” Andes said. “The leaders in the future are the countries that start making those investments today.”

The United States had the largest stimulus package at $789 billion as well as the largest technology spending program, which the foundation valued at $41 billion.

More than half of that U.S. tech spending has been focused on modernizing data processing systems in the health care industry, while roughly a quarter of the total is earmarked for so-called smart grid improvements to electricity distribution networks. The U.S. allocated another $7.4 billion to stimulate investment in broadband networks.

Japan made the next largest tech spending commitment of $32 billion as part of its $275 billion overall stimulus package. Japan focused its tech stimulus on intelligent transportation systems to reduce traffic congestion as well as better networking for its health care sector.

It is not clear how much of China's $586 billion stimulus program will be dedicated to technology. But the Chinese have indicated that modernizing their electric grid will be a national priority.