Despite the increasing productivity, our economy is already running out of people with the right skills. At the same time, many developing countries have surpluses of highly skilled, well-educated people. Leading-edge firms have already begun to exploit IT as a means of balancing the global supply and demand for talent.

Let's examine the facts and some of the major implications:

As recently as 1998, the EU's average unemployment rate peaked at 11.5 percent, but by mid-2002 it dropped to 7.6 percent despite relatively weak economic growth. The shortage of workers needed to fuel growth of the knowledge economy in Europe is more or less the same as in the United States. There are at present an estimated 1.7 million unfilled electronics-related jobs in the EU. As a result, Europe's global competitiveness in advanced technology and e-business is being compromised.

The traditional answer is immigration. Much of the reason that the "working age" U.S. population is still growing is the net migration from less developed countries. U.S. colleges and universities are magnets for Asia's best and brightest, who often stay after graduation. Less well-educated service and manufacturing workers continue to stream in from Latin America, legally and illegally.

In an effort to compete, Germany and Britain have waived immigration controls on people with computer skills. However, it's not clear that this solution will be able to keep pace with the huge shortfall that is going to occur in these countries between now and 2025.

Luckily, high-speed global communication networks now make it possible for U.S. and EU firms to tap the skills surplus in developing countries. This trend started decades ago with blue-collar jobs. For the past 30 years or more, manufacturing has been moving offshore to countries with low-cost, educated workers like Malaysia and Mexico. Today, the same thing is happening to all kinds of knowledge work.

As explained in the February 3, 2003 issue of Business Week, digitization, the Internet, and high-speed data networks that girdle the globe have made global outsourcing of services a reality. These days, tasks such as drawing up detailed architectural blueprints, slicing and dicing a company's financial disclosures, or designing a revolutionary microchip can easily be performed overseas.

That's why Intel and Texas Instruments...