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New Economy was a term coined in late 1990s by pundits to describe what some thought was an evolution of the United States and other developed countries from an industrial/manufacturing-based wealth producing economy into a service sector asset based economy from globalization and currency manipulation by governments and their central banks. At the time, some analysts claimed that this change in the economic structure of the United States had created a state of permanent steady growth, low unemployment, and immunity to boom and bust macroeconomic cycles. Furthermore, they believed that the change rendered obsolete many business practices. When the stock market bubble burst, analysts soon realized they had been wrong. While many of the more exuberant predictions proved to be wrong, some pundits continue to use the term New Economy to describe contemporary developments in business and the economy. Image File history File links Unbalanced_scales. ... A KFC franchise in Kuwait. ... In economics, the term boom and bust refers to the movement of an economy through economic cycles. ... // [edit] Introduction [edit] Definition If we were to take snapshots of an economy at different points in time, no two photos would look alike. ...

In the financial markets, the term has been associated with the Dot-com boom. This included the emergence of the NASDAQ as a rival to the New York Stock Exchange, a high rate of IPOs, the rise of Dot-com stocks over established firms, and the prevalent use of such tools as stock options. In the wider economy the term has been associated with practices such as outsourcing, business process outsourcing and business process re-engineering. Dot-com (also dotcom or redundantly dot. ... NASDAQ in Times Square, New York City. ... The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ... Wikipedia does not yet have an article with this exact name. ... Dot-com (also dotcom or redundantly dot. ... Main article: Option A stock option is a specific type of option that uses the stock itself as an underlying instrument to determine the options pay-off (and therefore its value). ...

The general idea is that a business should focus on those areas of its operation which are critical to its success and where it has a competitive advantage. Other areas of its operation should be outsourced, typically using technology as the facilitator. In a developed economy, the critical success factors to a leading business are likely to be intellectual things such as brands, products specifications and technical capabilities. Many routine business functions (such as manufacturing and customer service desks) may be outsourced.

Background

Around 1995, U.S. economic growth accelerated, driven by faster productivity growth. Since the early 1970s, labour productivity growth had only averaged around 1-1.5 percent per year, but since 1995, growth has been much faster: 2-2.5 percent. In addition, unemployment rates were lower than they had been in years and inflation stayed low as well. Already in 1995, Newsweek coined the phrase 'New Economy' to refer to this happy state. According to many commentators in the late 1990s, investment in Information technology (ICT) had eliminated economic fluctuations and ushered in a golden age of economic prosperity. The economist Robert J. Gordon referred to it as the Goldilocks Economy. The Newsweek logo Newsweek is a weekly news magazine published in New York City and distributed throughout the United States and internationally. ... Invest redirects here. ... Information and communication technology spending in 2005 Information technology (IT), as defined by the Information Technology Association of America (ITAA), is the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware. ... Robert J. Gordon is an economics professor at Northwestern University, he also holds the title of Stanley G. Harris Professor in the social sciences. He is an expert on: Measuring and explaining productivity growth The causes of unemployment Airline economics From 1995-1997 he served on a national commission to... It has been suggested that this article or section be merged into The Three Bears. ...

As with many things that seem too good to last, the recession of 2001 discredited many of the more extreme predictions made during the boom years. However, subsequent research strongly suggests that productivity growth has been stimulated by heavy investment in ICT. Furthermore, continuing strong productivity growth since the 2001 recession make it likely that some of the gains of the late 1990s may endure. In macroeconomics, the definition of recession is a decline in any countrys Gross Domestic Product (GDP), or negative real economic growth, for two or more successive quarters of a year. ...

Links: U.S. labour productivity data[1] and U.S. business cycle dates[2]

Technology sector

At the same time, there was a lot of investment in the companies of the technology sector. Stock shares rose dramatically. A lot of start-ups were created and the stock value was very high where floated. Newspapers and business leaders were starting to talk of new business models. Some even claimed that the old laws of economics did not apply anymore and that new laws had taken their place. They also claimed that the improvements in computer hardware and software would dramatically change the future, and that information is the most important value in the New Economy. Start-Up (also know as Start-Up 2000) is a PC video game in which players must try to build a successful business start-up from venture capitalists to IPOs. ...

Investment

Some, such as Joseph Stiglitz, have suggested that a lot of investment in Information technology, especially in software and unused fibre optics, was useless. However, this may be too harsh a judgement, given that U.S. investment in Information technology has remained relatively strong since 2002.[3] While there may have been some overinvestment, productivity research shows that much of the investment has been useful in raising output. Joseph Stiglitz (born February 9, 1943) is an American economist, author and winner of Nobel Prize for economics ( 2001). ... Invest redirects here. ... Information and communication technology spending in 2005 Information technology (IT), as defined by the Information Technology Association of America (ITAA), is the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware. ... Computer software (or simply software) refers to one or more computer programs and data held in the storage of a computer for some purpose. ... Fiber Optic strands An optical fiber in American English or fibre in British English is a transparent thin fiber for transmitting light. ... Information and communication technology spending in 2005 Information technology (IT), as defined by the Information Technology Association of America (ITAA), is the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware. ...

Literature

• Georg Erber & Harald Hagemann: "The New Economy in a Growth Crisis", in: The New Economy in a Transatlantic Perspective: Spaces of Innovation, ed. Kurt Hübner, Routledge Studies in Governance and Change in the Global Era , Routledge, 2005. [4]
• Richard Sennett: The Culture of the New Capitalism, Yale University Press, 2006.

• Joseph E. Stiglitz: "The Roaring Nineties - A new history of the world's most prosperous decade", 2003.
• Michel Volle, e–conomie, Economica, 2000, ISBN 2717840737

Richard Sennett (born Chicago, 1 January 1943) is the Centennial Professor of Sociology at the London School of Economics and Professor of the Humanities at New York University. ... The Culture of the New Capitalism (2006) is a book on the current economic situation by Richard Sennett which covers politics, economics, sociology and psychology. ...

See also

• Asset-based economy
• The Long Tail
• Knowledge Economy

Asset-based economy refers to a post-industrial macroeconomic state of capitalism in which growth is based largely on appreciation of equity assets, typically financial instruments such as stocks, as well as real estate. ... The phrase The Long Tail (as a proper noun with capitalized letters) was first coined by Chris Anderson in an October 2004 Wired magazine article[1] to describe certain business and economic models such as Amazon. ... A knowledge economy is either economy of knowledge focused on the economy of the producing and management of knowledge, or a knowledge-based economy. ...

UNDP-APDIP Books

Wikibooks has a book on the topic of

The Information Age

• The Information Age

This e-primer provides a comprehensive review of the digital and information and communications technology revolutions and how they are changing the economy and society. The primer also addresses the challenges arising from the widening digital divide. Image File history File links Wikibooks-logo-en. ... Wikibooks logo Wikibooks, previously called Wikimedia Free Textbook Project and Wikimedia-Textbooks, is a wiki for the creation of books. ...