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
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
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
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
* 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been replaced by jobs in offices.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
* 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.
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. …