Maryland a leading actor on Internet stage

The Economy

Internet a big factor in Md. economy

June 11, 2000|By WILLIAM PATALON III

With all the attention we pay to the still-high market values of all those profitless Internet start-ups, it's understandable that we sometimes forget that there's a real industry there - an industry with an actual economic benefit besides making our monthly brokerage statements go up and down.

In fact, in just a few short years, the Internet sector has become the fastest-growing, and most vibrant, slice of the economy - not only nationwide, but here in Maryland, too.

These Net firms create jobs - and nice paying ones, at that. They stoke the corporate coffers of their suppliers, many of which aren't technically part of the "New Economy," but which benefit, nevertheless.

And the products and services these Internet firms peddle very often make their client companies cutting-edge competitive - boosting their profits and share prices in the process.

When you add up all those benefits, the Internet sector is clearly having more of an economic impact than we realize.

Last week, a study released by the Center for Research in Electronic Commerce, an affiliate of the University of Texas at Austin, said that Internet firms recorded more than half a trillion dollars in revenue last year, while adding 650,000 workers. The Internet sector now directly supports 2.5 million workers, according to the study, which was financed by Cisco Systems Inc.

A Commerce Department study looked at different trends but reached similar conclusions. Although information-technology companies directly accounted for only 8 percent of the nation's economic output last year, they contributed to 32 percent of U.S. growth, the Commerce Department found.

"Information technology and the Internet are having a deep and significant effect on the way the U.S. economy performs," Undersecretary of Commerce Robert Shapiro said at the news conference unveiling the report.

Maryland isn't merely trying to ride out this technological tsunami - it's actually helping generate the gale-force wind of change that has the U.S. economy under full sail into the digital age.

"Even some Marylanders underestimate their own high-technology prowess because of the close proximity of Northern Virginia," the technology juggernaut that is Maryland's arch-rival in the high-tech arena, said Anirban Basu, director of applied economics at RESI, the economic-research and business-consulting arm of Towson University. "But Maryland is a leading technology state."

For proof, look no further than the state's work force, said Pradeep Ganguly, director of the Office of Business and Economic Research for the Maryland Department of Business and Economic Development.

"If you look at what our strengths are, and what we're doing today, Maryland has the complete agenda," Ganguly said.

For example, 24 percent of the state's work force is composed of professional and technical workers - the types of workers with which high-tech firms fill their ranks - the highest percentage in the nation. Maryland ranks third nationwide in civilian scientists and engineers as a percentage of its work force - also crucial, since scientists conceive and develop new technologies, while engineers turn that technology into usable products.

Overall, about 220,000 of the 2.4 million people - nearly 9 percent - who worked in Maryland last year, had jobs in such high-tech businesses as telecommunications, information technology and biotechnology, Ganguly said.

Such a well-stocked work force blazes the trail for growth: Either entrepreneurs launch start-ups and build them into big companies over time, or companies from outside the area relocate here, or start an operation here to take advantage of the state's work force.

One researcher, Cognetics Inc., looked at the success rate of start-ups in all the regions, states and major metropolitan areas over the past decade as one way of ranking the best places for start-ups to put down roots.

Maryland was rated as the sixth most entrepreneurial state in the country for 1999, an improvement of eight spots from 1998.

Baltimore didn't fare quite as well in the metro-area rankings - coming in at 27th - though its 10-spot improvement from 1998 was the biggest gain among any of the cities in the Cognetics study.

All these ingredients seem to be yielding powerful results. Consider "The State New Economy Index," done by the Progressive Policy Institute, a Washington-based researcher. The study delved into such areas as the digital economy, the percentage of the population online and high-tech jobs, with its objective being to develop a "New Economy" snapshot of each state.

Maryland fared very well. With 46 percent of its households online, the state ranked third behind Alaska and Colorado. It was ninth in the number of Internet domain names registered commercially. And it ranked 10th in high-tech jobs as a percentage of its overall work force. The upshot: Maryland was ranked overall as the sixth most developed digital economy in the country - two spots ahead of Virginia.

Such rankings are subjective and fluid - particularly in a niche like the Internet, where business and technology cycles can be measured in months, not years. When it comes to the Internet economy, however, Maryland has the wind at its back, the experts say.

"Maryland has one of the most sophisticated, highly educated work forces in the nation," said RESI's Basu. "Maryland will be a leader nationally and internationally for years to come."

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