What is New Economy?
The new economy refers to the convergence of manufacturing, services and technologies to produce high value-added, technology-enabled, and adaptable industries.
How Does New Economy Work?
Industry trends have always adapted to changes in technologies, incorporating and often initiating changes to improve productivity, quality, and profitability. With the rapid growth of communications technologies from the mid 1980s, companies have been able to adapt even faster. An important component of the new economy is the global span of many business processes and linking value chains (i.e. designers, suppliers, producers, marketers, distributors, and customers) together using communication and management technologies. Since companies have been focusing on their core competencies and using these new communication tools, organizations have been able to outsource efficiently and improve their profitability.
The evolution of industry with the integration of new technologies is certainly not new. Agricultural producers introduced new technologies and changed dramatically how food is produced. Traditional manufacturing gave way to advanced manufacturing, integrating continuous quality improvement goals with a skilled workforce and the latest production technologies to produce higher quality and lower marginal costs. More recently, business services are giving way to technology-enabled services, integrating communication and management technologies, skilled workers (wherever they are found), and scalable business models to produce high value-added services when and where they are needed.
Why Does New Economy Matter?
The current waves of industry phenomena, from the computer industry (e.g. PCs, PDA, and software), the Internet industries (e.g. dot-coms), and the technology-enabled services (e.g. online market places, communication, and customer relationship management (CRM) and virtual workplaces), are all elements of the new economy as we become a global marketplace.