Increasing effect of the development of information technology (IT) on global economy

Description:

The economic impacts of IT, like its uses, are pervasive. It poses great impact in the transformation on traditional businesses, which continue to produce the majority of national economic output. Not only has IT been a factor in the growth of various industries and in the economy as a whole, but it has contributed as well to changes in the nature and mix of activities undertaken by firms, through that process altering the nature and organization of industries.

Realizing that information technology has the potential to affect the entire economic system, people summarized the impact of IT in the phrase “the new economy.” This is the latest version of a metamorphosis previously characterized as the knowledge economy and before that as the information economy.

Enablers:

1. Heavy investment in ICT stimulates productivity

2. IT enables innovative approaches of doing business

3. IT-infrastructure adoption in organization structure

4. Cost of computing power continues to fall

5. Rising concern about technical capabilities as the critical success factors to a leading business In a developed economy

Inhibitors:

Conservative attitude toward innovation: As new technology brings drastic innovations that introduce a discontinuity, the old guard tends to view it as useless and discard it rather than explore possibilities in financial markets.

Paradigms:

1. Traditionally, economists have considered the conventional factors such as labor and capital to be the primary force behind economic growth. Now, however, more and more macroeconomists place technological progress at the center of the growth process.

2. The gradual growth and diffusion in use of computers and communications technologies is now accelerating the shift of economy character from manufacturing to services.

Experts:

Georg Erber, German Institute for Economic Research (DIW Berlin), e-mail: gerber@diw.de Elhanan Helpman, http://www.economics.harvard.edu/faculty/helpman/helpman.html

Timing:

1943: The world’s first electronic computer was created.

1970s: The invention of the microprocessor made computers became accessible to the public.

1984: EDI, or electronic data interchange, was standardized through ASC X12, which guaranteed that companies would be able to complete transactions with one another reliably.

1990s (late): the term of New Economy was coined to describe the change in the economic structure of the United States from an industrial/manufacturing-based wealth producing economy into a service sector wealth consuming asset based economy.

2001: After the recession, a continuing strong productivity growth was stimulated by IT development.

Web Resources:

1. http://en.wikipedia.org/wiki/New_economy

2. http://findarticles.com/p/articles/mi_m0377/is_2001_Spring/ai_73368515

3. http://www.rke.net/newsletter/newsletter_volume_2_issue_1.pdf

4. http://books.nap.edu/openbook.php?chapselect=yo&page=1&record_id=9830 http://books.google.com/books?id=TSSePifW9Y4C&printsec=frontcover&dq=technology+effect+economy+&psp=1&hl=zh-CN