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 6: 2000–2002: Reassessing the Potential of ICT-driven Growth

Robert Boyer

Subjects: economics and finance, industrial organisation

Extract

INTRODUCTION At times it has seemed as if economists were seeking to align their thinking with the optimistic reaction of financial markets to the duration of the US growth phase. They urged that European countries and Japan import as quickly as possible the institutions and forms of organization that had led to the success of Silicon Valley. Of course, two major events then took place: the NASDAQ’s March 2000 plunge; and the rapid slowdown in the US economy during the third quarter of 2000, something that by the latter half of the following year raised the spectre of recession. This reversal in fortunes surprised many observers, even though a structural, historical and comparative analysis such as the one undertaken in this book would have provided a key to understanding the expansion phase, as well as the sharp readjustments that followed. There is no doubt that the productive, social and financial structures of most OECD economies no longer resemble the ones inherited from the Fordist era. It also remains the case that the ‘new economy’ concept turned out to be wholly inadequate, to such an extent that in 2001 it was doomed to disappear rapidly. Is this not the fate awaiting all representations or theories which define themselves solely in terms of being radically different from past events, or chapters in a story now deemed to be closed? THE INTERNET BUBBLE: FROM BOOM TO BURST The NASDAQ’s collapse in March 2000 marked the end of the seamless creation of Internet companies...

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