The New Economy Essay -- essays research papers

THE NEW deliveranceIt works in America. Will it go worldwide?It seems well-nigh in any case good to be true. With the information technology sector leading the way, the U.S. has enjoyed almost 4% appendage since 1994. Unemployment has fallen from 6% to about 4%, and ostentation just keeps getting lower and lower. Leaving out food and energy, consumer pompousness in 1999 was only 1.9%, the smallest increase in 34 years. This spectacular extend was not built on smoke and mirrors. Rather, it reflects a bequeathingingness to undertake wide risky investments in innovative information technology,combined with a decade of retooling U.S. financial markets, governments, andcorporations to cut costs and increase flexibility and efficiency. The result is the supposedNew parsimoniousness faster growth and lower inflation. Most incarnate executives and policymakers in Europe and Asia, once skeptical about the U.S. performance, have taken this lesson to heart. There are still wides preadmisgivings about the U.S. model of free-market capitalism. provided driven by a desire forfaster growth, combined with a fear of being left behind, the rest of the world is starting to pet the benefits of a technology-driven expansion. But a global New miserliness will not happen overnight. True, spending on technology, the most visible fiber of the New Economy, eon not yet up to U.S. levels, is on the jump-start everywhere. Semiconductor sales were up 17% worldwide in 1999, while the number of Internet utilizationrs in Western Europe and the Asia-Pacific region is expect to more than double over the next five years (chart). as yet in a developing country such as India, the software package industry is growing at a rate of 50% to 60% annually. OLD VIRTUES. But the worldwide proliferation of mobile phones and Web accounts by itself will not bring about a more vibrant global economy. What are also needed are dramatic changes in outcome institutions that will translate t echnology into faster productivity growth. That means financial markets better able to fund innovation, more flexibility in corporations and bray markets, a faster pace of deregulation, and increased competition (table). The New Economy is built on old virtues thrift, investment, and letting market forces operate, says Treasury repository Lawrence H. Summers. There are signs that the process of change has started. With growth picking up in Europe, and Asia emerging fro... ...dents accounted for two-thirds of the growth in science and engineering doctorates at U.S. universities. Most of them planned to stay and work in the country. Like some other aspects of the New Economy, opening up the doors to foreign workers wont come slow in many countries. But the genie is out of the bottle--now that the U.S. has shown that faster growth is possible, no country will be able to resist it. In the end, the benefits will be well worth the pain. The Road to the New EconomyHeres what countries must do to get a high-productivity, low-inflation economy BOOST investiture SPENDING on information technology as a role of GDP RESTRUCTURE CORPORATIONS to cut costs, improve flexibility, and makebetter use of technology OPEN FINANCIAL MARKETS to direct capital to the best uses ruin VENTURE CAPITAL and IPO markets to aid innovative companies ENCOURAGE AN entrepreneurial CULTURE and make it easier to startnew businesses INCREASE THE PACE OF deregulating especially in telecom and labormarkets ADJUST MONETARY insurance policy to the realities of the New Economy by waiting for inflation to appear to begin with raising interest rates