NEW ECONOMY AND ITS SPECIFICATIONS (DIGITAL ECONOMY, INTERNET ECONOMY, KNOWLEDGE ECONOMY)
R. ERWİN PUTERA PAMUNGKAS SAPTONO
1. Introduction From around 1938 to 1974, the economy was built on a manufacturing base geared toward standardized production. It was organized into stable, hierarchical and generally autocratic organizations. These organizations achieved a competitive edge in the market by making standardized products faster and more economically. They focused on incremental cost reductions and a national marketplace. This is how success and prosperity were achieved in most states. (Jacquelyn P. Robinson, 2000) Now that companies can source capital, goods, information, and technology from around the world, often with the click of a mouse, much of the conventional wisdom about how companies and nations compete needs to be overhauled. In theory, more open global markets and faster transportation and communication should diminish the role of location in competition. After all, anything that can be efficiently sourced from a distance through global markets and corporate networks is available to any company and therefore is essentially nullified as a source of competitive advantage. (Michael E.Porter, 1998) Traditional concepts of the factors of production need to be changed - Was land, labour and capital, now need to add knowledge. A firm's ability to gather, process and distribute information into enterprise wide knowledge is a core competence in competitiveness. http://www.scribd.com/doc/28758846/Information-Economy-and-Knowledge-Management; accessed on 26.12.2010
1.2 New Economy Define Competition in today's economy is far more dynamic. Companies can mitigate many input – cost disadvantages through globlal sourcing, rendering the old notion of comparative advantage less relevant. Instead, competitive advantage rests on making more productive use of inputs, which requires continual innovation. The new economy is emerging as a knowledge- and idea-based economy. In this new economy, the key to success and prosperity is the extent to which technology can be utilized, quality can be provided, and ideas and innovation can be embedded in all sectors of the economy For example, 80% of the jobs in America today do not spend time making things, they move things, process things, or generate information. In 1950, 60% of the jobs could use unskilled labor—today only around 15% of jobs can use unskilled labor. The requirement for professionals
has held steady at about 20%. The growth has come in skilled jobs, and these jobs require education and training. Real wages (adjusted for inflation) for high school graduates with no technical training are down 18% over the last 18 years. Real wages for persons without a high school diploma have dropped 40% in the last 18 years. (Jacquelyn P. Robinson, 2000) The New Economy as a sector, with implications for the production and utilisation of new Information and Communication Technologies (ICT) People increasingly use the term New Economy to describe that part of the economy which is devoted to the exploitation and development of ICT. This is a low-level meaning, and a relatively recent one, which has tended to replace the other definitions, despite their seniority. This new meaning has become particularly prevalent since stock market-related articles in the press have been invaded by a distinction between new and old economy stocks, that is to say, since the late 1990s. (Bernard Paulre, 2000) The new developments in the economy are making possible the creation of new types of organizations where the application of information technology to knowledge work will increase organizational productivity and effectiveness. However, the more far reaching consequences will be changing organizational goals and objectives. To do so...