The Future of Economic Growth

The Future of Economic Growth

As New Becomes Old

The Cournot Centre series

Robert Boyer

In this book, Robert Boyer follows the origins, course and collapse of the ‘new economy’ and proposes a new interpretation of US dynamism during the 1990s. He argues that the diffusion of information and communication technologies is only part of a story that also requires understanding of the transformation of the financial system, the reorganization of the management of firms and the emergence of a new policy mix. The book includes a long-term retrospective analysis of technological innovation, and an international comparison of OECD countries delivers an unconventional and critical assessment of the hope and the hype of the ‘new economy’.

Chapter 3: A Growth Regime Driven by Information and Communications Technology?

Robert Boyer

Subjects: economics and finance, industrial organisation

Extract

INTRODUCTION The organizational and microeconomic aspects reviewed so far have taken on increasing importance as people start to recognize the specificities of informa­ tional goods. Two leading economists have estimated, for example, that ‘the main effects of the “new economy” will be more microeconomic than macro­ economic, inasmuch as they will be inducing deep-seated changes in fields such as property rights, institutional arrangements and the rules orienting a market economy’ (DeLong and Summers, 2001). It remains the case that the initial response of macroeconomists to the recovery observed in US productivity during the country’s exceptionally long period of non-inflationary growth, was to reason that it had a direct effect on the growth regime. Their research and analytical efforts, therefore, concentrated at first on three main questions: What are the relationships between the hightech sectors and the rest of the economy? Can these sectors be the locomotive for an emerging growth regime? And should we consider that a new type of capital, one involving information and knowledge, has replaced traditional capital goods and is generating an original form of technological change? THE NEW AND THE OLD ECONOMIES: A CONJUNCTION OF TWO VIRTUOUS CIRCLES? Analyses have led to the view that ICT’s impact on a growth regime is the product of two relatively distinct mechanisms. The first virtuous circle has impacted on the returns to scale and the learning and network effects that are an inherent part of informational goods (Figure 3.1). The intensity of the mechanism at work here is unique...

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