Technology Leads to Global Sharing (College Board AP® US History): Study Guide

The Digital Revolution

Summary

The U.S. economy experienced a transformation at the turn of the 21^st century, fueled by rapid advancements in technology. The Digital Revolution reshaped communication, business practices, and productivity. The service sector became a dominant source of employment, and changes in wages reflected the changing economic landscape.

The Digital Revolution

• The Digital Revolution is the transition from analog to digital technology

• The Digital Revolution revolutionized:

  • industries

  • communication

  • daily life

• Key technological milestones:

  • 1946: The invention of the computer, made possible by the invention of the transistor (electronic switches) and later enhanced by the microprocessor 

  • 1979: The release of Apple I by Steve Jobs and Steve Wozniak

    • This was one of the first consumer-friendly computers

  • 1981: IBM releases the first Personal Computer (PC), making computers accessible to homes and businesses

    • This set a new industry standard

Impact on productivity

• The Digital Revolution increased the efficiency and speed of communication worldwide

• The Digital Revolution fostered globalization by connecting businesses and consumers across borders

The Internet

• The Internet is a system of global interconnection of servers and computers

• It originated in the late 1960s

  • It was a military project to create a communication network

• By the late 1980s, it became available for public use and revolutionized connectivity

• The World Wide Web was developed in the early 1990s as a system to connect users via web browsers 

  • It enabled user-friendly navigation of online information

• Email replaced traditional office communication such as faxes, office memos, and letters, allowing users to communicate globally

• E-commerce

  • Companies such as Amazon and PayPal revolutionized shopping and financial transactions

  • Banking and other financial transactions changed as digital services now increased efficiency and productivity, leading to an improvement in services and costs 

Key companies and concepts

• Microsoft

  • Founded in 1975 

  • It played a pivotal role in the Digital Revolution by creating programs that standardized most office duties, such as Word, and Excel

• The Dot.com (opens in a new tab) boom

  • This term means the rise of companies that operate mostly online, offering services and products via websites

• Outsourcing:

  • Companies began using third-party organizations, usually overseas, for staffing and production to cut costs

  • Outsourcing increased because of the Free Trade Agreements 

    • These agreements eliminated tariffs and other barriers to encourage trade between two nations

  • Positive impacts of Free Trade Agreements:

    • They are used to expand global markets and stimulate economies 

    • They encourage economic interdependence between nations 

  • Negative impacts of Free Trade Agreements:

    • They cause job losses as companies move production to nations with lower labor costs overseas

    • They lower prices on some items because of cheaper labor sources overseas, which domestic companies cannot compete with

Service Sector & Wages

• The service sector refers to industries and jobs that provide services rather than physical goods, such as:

  • education

  • healthcare

  • hospitality

• The growth of the service sector was due to:

  • the rapid technological advancements during the Digital Revolution

    • This improved the quality of services

  • the demand for services increased as populations grew

    • The economy became more service-orientated

  • global competition among service-based businesses

• The service sector became the largest employer in the U.S., overtaking manufacturing jobs

Wages

• Wages reflected the economic shifts caused by globalization and technological change

• Real wages refer to wages adjusted for inflation

  • This provides a clearer picture of an individual's purchasing power over time

  • They are used to measure:

    • a nation’s economic health

    • trends in the economy

    • economic inequality: the gap between the working class, middle class, and wealthy

• Despite economic growth during the Digital Revolution, real wages for many workers did not change

  • The number of manufacturing jobs declined 

  • Service jobs usually had lower wages than skilled laboring jobs