Information Technology Revolution

New Economy Time Capsule

The world economy has been reshaped and significantly transformed in recent years. While we tend to refer to this transformed economy as the new economy, according to the theory of Kondratieff cycles, this economy is not so radically new. It is essentially a reborn economy; this transformation takes place about every 40 to 60 years. Global development has unfolded through the succession of new economies. The new economy may be represented as a comparable economic transition driven particularly by revolution in technology. The first new economy (1770 to 1830) was characterized by water mechanization. The second new economy (1820 to 1880) was focused on steam mechanization, which led to the development of railroads. The third new economy (1870 to 1930) brought major development in electricity. The fourth new economy (1910 to 1970) contributed to the growth of the automobile industry. The fifth new economy, which began around 1960, kick-started the development in defence, television, mainframe computers, personal computers, telecommunications, and entertainment (Norton, 1999).

Information Technology Revolution

The information and communication technology (ICT) revolution is characterized by three major trends. The foremost characteristic of the digital era was marked by the omnipresence of microchips. Secondly, there was a dramatic decrease in the cost of computing. Thirdly, there was significant reduction in data costs. The term digital economy was coined to describe this new economy, which is driven by ICT. This term emerged from the observation that the relatively smooth transition from the old economy to the new economy was facilitated by the emergence of information goods, which can be digitized. This prominence of information commodities also entailed three landmark events: the invention of the microprocessor in 1971, the introduction of the personal computer (PC) in 1981 and the commercialization of the Internet in 1994 (Norton, 1999).

The microprocessor switched the world from an analog to a digital mode in which virtually every person, company, and government is a customer for technology products, mostly because of the introduction of PCs in 1981. The invention of the PC thus rendered anything and everything subject to the power of the computer, while retaining the crucial dimensions of human scale, decentralized decision making, customized design, and creativity (Chinien, Moratis, Boutin, & Baalen, 2002). Countries that were early adopters of the digital economic paradigm have deployed technology to create wealth and social progress. According to a recent OECD report, China has become the largest exporter of ICT goods, while India is now the largest exporter of ICT infrastructure and services (OECD, 2010). The e-skills UK Sector Skills Council noted that: “Digital technology is the single biggest lever for productivity and competitiveness across every sector of the economy” (e-skills UK Sector Council, 2009a, p. 5).

The imperative for Canada to embrace the digital economy was stated in the Speech from the Throne on March 3, 2010, and concrete action to create a national digital economic strategy was launched in May 2010 by a broad consultation of Canadians. The consultation paper on a Digital Economy Strategy for Canada defined digital technologies as: “tools, capacities or knowledge assets that can be embedded in business processes, products and services to help firms and individuals in all sectors of the economy become more productive, innovative and competitive” (Government of Canada, 2010, p. 11).

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