size and shape

This page highlights debate about the size and shape of the 'new' economy.

It covers -

• the shape of the economy
• its size
• impacts
• who is participating

The separate guide on web metrics and statistics provides a detailed coverage of internet statistics (number of hosts, number of domains, growth in traffic) and the digital divide. It also points to sources of metrics information.

     the shape of the economy

Information Rules: A Strategic Guide to the Network Economy (Boston: Harvard Business School Press 1999) by Hal Varian & Carl Shapiro provides an excellent introduction to the 'new' economy. 

In contrast to the utopians considered in our Digital guide, it argues that we are all living in the same world and same economy: the expression might vary but the economic fundamentals remain the same. 

Internet Economics (Cambridge: MIT Press 2000), edited by Lee McKnight & Joseph Bailey, is more restricted but of value as an introduction to several of the traffic pricing and access issues explored in our network guide.

Varian's site - like that of the Harvard Information Infrastructure Project (HIIP) - has pointers to a range of US government and academic publications.

Reports by government and advocacy bodies disagree about facts and interpretations. In Australia, apart from the hard-headed reports by the Australian Bureau of Statistics (ABS) - in particular their Business & IT and Internet bulletins - and problematical private sector studies much media attention has centred on reports from the former National Office for the Information Economy (NOIE).

These include the Current State of Play, a quarterly statistical report supplying indicators of Australian ecommerce activity along with international benchmarks. NOIE was to be applauded for its belated emphasis on local data, given its tendency to concentrate on overseas studies. 

In the US the Information Technology & Innovation Foundation (ITIF), an ICT industry advocacy body, claimed extraordinary productivity gains from investments in computing technology in its 2007 Digital Prosperity: Understanding the Economic Benefits of the Information Technology Revolution document.

     the size of the economy

The October 2000 E-Commerce Across Australia report from NOIE supplemented the January E-commerce Beyond 2000 report, arguing that e-commerce will neutralise the tyranny of distance and place us all on a level footing in the global marketplace. Reality's a bit more complicated than that, but the new report offers a detailed analysis of the potential impacts on regional Australia.

NOIE's Australia's E-Commerce Report Card was essentially a slim annual report on progress against the Strategic Framework For The Information Economy issued in January 1999.  Must reading if you're a bureaucrat, otherwise no. The US prototype was the 1997 A Framework for Global Electronic Commerce (aka the Magaziner Report, discussed here ). 

Sceptics will of course turn to Robert Gordon and Paul Strassman, whose work is highlighted throughout this site. An introduction to debate about the impact of IT investment is provided in Information Technology and the Productivity Paradox: Assessing the Value of Investing in IT (New York: Oxford Uni Press 1999) by Henry Lucas, Nicholas Carr’s Does IT Matter? (Boston: Harvard Business School Press 2004)and Productivity, Inequality & the Digital Economy (Cambridge: MIT Press 2002) by Nathalie Greenan.

In June 2000 NOIE released a report on the uptake of electronic commerce among small and medium sized enterprises, arguing that around 60% of Australian businesses are "online" and - more usefully - examining impediments to the growth of ecommerce. 

Much of the report's inconsistent with the more credible December 2000 report from the Australian Bureau of Statistics (ABS) regarding business use of IT, including use of email, etailing and online presences.

Offshore The Economic & Social Impacts of Electronic Commerce: Preliminary Findings & Research Agenda report from the OECD explores the growth of E-C, the impact on national economies and business models, employment and wider social implications.  

It follows the 1997 report on Measuring Electronic Commerce.  The OECD has recently released a separate New Economy report (PDF), primarily concerned with the relationship between information technology and growth.

In North America the US Commerce Department's Digital Economy 2000 (DE2K) report, touted as a national scorecard, considers e-commerce (defined as business to business and business to consumer transactions using digital technology) and information technology within the US economy. It replaces the 1999 Emerging Digital Economy II report and a similar 1998 document.

Statistics Canada has produced several excellent studies of IT uptaske, e-commerce and internet activity. Fast Forward: Accelerating Canada's Leadership in the Internet Economy is a 2000 report by Boston Consulting for the Canadian E-Business Round Table.

The website of the US government Electronic Commerce agency contains a wealth of information about policy-making and research initiatives in the US.  The World Trade Organization (WTO) site - currently being reconstructed - provides access to statistical data, research and international agreements such as TRIPS.

The major 1999 conference on Understanding The Digital Economy: Data, Tools & Research - a partnership between MIT and the Digital Economy office of the US Department of Commerce - featured a number of significant reports. They are available in the book of the same title (Cambridge: MIT Press 2000), edited by Erik Brynjolfsson & Brian Kahin. 

The US Internet Council - comprising state and national legislators - released State of the Net 1999, a snapshot of access, ecommerce, traffic and other Internet developments in the land of the free. While some of the figures are suspect, the report is a useful compilation, particularly if read in conjunction with studies such as  Measuring The Internet Economy (PDF), a report by Barua, Pinnell, Whinston & Shutter of the University of Texas. 

     impacts 

As we've noted in our Internet Metrics & Statistics guide, much of the discussion about the impact of the web or the new economy has concentrated on measures of connectivity - in themselves often quite problematical - rather questions about how the technology is being used. There have been few credible attempts to measure the web's economic impact, ranging from user perceptions of the surplus of benefits over the costs of subscribing or is the surplus of income received by service suppliers over the cost of doing business online.

Connectivity measurement has often resulted in a sort of statistical delirium: kilometres of fibre rolled out, millions of personal computers sold, number of web hosts and domains, and so forth.

Determining use and value is more difficult. There are strong indications, for example, that many personal computers in homes are primarily used for game-playing or for email, if at all. 

Contrary to some Australian reports, having a pc does not necessarily mean being online. While telecommunications companies and other connectivity providers offer high-speed access, in practice many consumers cannot afford the service, so network statistics need to be used with caution. Figures for who's online - in particular the number of visits to particular sites - call for greater caution, given major disagreement about metric standards and the incentive to fudge advertising or other figures.

Two starting points for exploring some of those questions are Rob Kling's paper on Asking The Right Questions About The Internet in the September 2000 issue of Information Impacts magazine and Brynjolfsson & Kahin's Understanding The Digital Economy: Data, Tools & Research (Cambridge: MIT Press 2000). 

     who's participating 

The internet metrics & statistics guide elsewhere on this site offers pointers to research about who is online, the size of the net and vexed questions such as the various 'Digital Divide/s'. 

We're progressively adding demographic information to a set of Demographic profiles.



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