The Changing Determinants of Economic Performance in the World Economy
- New Horizons in Institutional and Evolutionary Economics series
Chapter 6: Third industrial revolution
In the current technoeconomic paradigm shift, the competitiveness and growth strategies of nations should be based on an objective assessment of their socio-economic situation (starting point) and the ‘state-of-the-art’ in socio-economic development. Since the adoption of the new best practice paradigm involves massive increasing returns, no nation can ignore it without major economic and social costs (Lipsey 1997). The socio-economic collapse of the former communist countries provides a case in point.1 The first section of this chapter examines the accumulation of problems within the old mass production paradigm in the 1970s and 1980s. The crisis of the old paradigm led to the emergence of a new technoeconomic paradigm in the early 1980s which was based on the new information and communication technologies. The second section introduces the core elements of the new paradigm. The final section of the chapter argues that a major global depression is quite possible in the next few years despite the strong performance of the world economy in the 1990s. 1 CRISIS OF THE TWENTIETH-CENTURY PARADIGM The mature twentieth-century socio-economic paradigm began to accumulate increasing problems in the late 1960s. These problems were related to fundamental changes in the technoeconomic core of the established paradigm: external business activities, productive resources, technologies, organizational arrangements and product market structures. The industrialized countries could not adjust to these structural problems without a fundamental paradigm shift in their economic systems. Globalization of business During the past few decades the continuous growth and geographical integration of markets has led to an...
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