For any quantum algorithm operating on pure states we prove that the presence
of multi-partite entanglement, with a number of parties that increases
unboundedly with input size, is necessary if the quantum algorithm is to offer
an exponential speed-up over classical computation. Furthermore we prove that
the algorithm can be classically efficiently simulated to within a prescribed
tolerance \eta even if a suitably small amount of global entanglement
(depending on \eta) is present. We explicitly identify the occurrence of
increasing multi-partite entanglement in Shor's algorithm. Our results do not
apply to quantum algorithms operating on mixed states in general and we discuss
the suggestion that an exponential computational speed-up might be possible
with mixed states in the total absence of entanglement. Finally, despite the
essential role of entanglement for pure state algorithms, we argue that it is
nevertheless misleading to view entanglement as a key resource for quantum
computational power.Comment: Main proofs simplified. A few further explanatory remarks added. 22
pages, plain late
