How Much to We Really Know about the `New Economy'?

By Neese, Terry | THE JOURNAL RECORD, December 7, 1998 | Go to article overview

How Much to We Really Know about the `New Economy'?


Neese, Terry, THE JOURNAL RECORD


We all know what the New Economy means, right? It is technology. It is globalization. It is new workplaces where people work in teams rather than assembly lines. It is young and fast paced and changing every day. It is exciting if you're part of it and scary if you're not.

But how much, in terms of facts and figures, do we really know about the New Economy: its size, its shape, its pace, and its implications for present and future generations? And how much of our "knowledge" is based on stereotypes and anecdotes?

To establish a real-life statistical foundation for discussions of the New Economy, the Progressive Policy Institute's Robert D. Atkinson, director of PPI's Project on Technology, Innovation, and the New Economy, and Randolph H. Court, PPI technology policy analyst, have produced a benchmark document called The New Economy Index: Understanding America's Economic Transformation (www.neweconomyindex.org). Using thirty-nine statistical "indicators," The New Economy Index examines the force driving economic change; the effects of the New Economy on Americans, their work, and their standards of living; and the criminal elements of future economic growth and equity. This report confirms the growing belief that a new U.S. economy is no longer a future prospect, but a present reality. Structural changes in our economy are being produced by four major forces: * The information technology revolution. The advent of powerful, low-cost personal computers, high-speed telecommunications, and the Internet are transforming our economy. This transformation is happening not just in "high-tech" firms. Equally important is the application of information technologies to other economic sectors to cut costs, restructure work, enable the rapid development of new products and services, and change the competitive dynamics within and between industries. * The changing industrial and occupational mix. Where and how Americans work is steadily changing. Virtually all the jobs lost in the production and distribution of goods between 1969 and 1995 have been replaced by jobs in offices. Managerial and professional jobs now account for nearly three in 10 jobs. * Globalization. It is here. The sum of U.S. exports and imports has risen from 11 percent of the U.S. GDP in 1970 to 25 percent in 1997. * Entrepreneurial dynamism and competition. The economic landscape is increasingly crowded with small, high-growth companies. More than 350,000 companies posted sales growth of 20 percent per year between 1993 and 1997, and produced 70 percent of the country's net new jobs. The impact of the New Economy on the American standard of living is mixed. Per capita GDP and productivity growth rates have declined steadily since the 1960s. Low productivity gains are in turn the main factor explaining sluggish income growth, especially among non- college educated workers who are not qualified for the high-skill jobs where wages are rising rapidly. Even workers whose wages are going up steadily are experiencing less job stability and receiving fewer non-wage benefits. The New Economy Index focuses special attention on measuring our progress towards taking steps that could accelerate economic growth while spreading its blessings more widely throughout the U.S. population. It shows that the "digital economy" is growing rapidly with households, schools, and businesses quickly gaining access to the Internet and other online services, but with government lagging significantly behind. …

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