Exchanging bytes for a bottle of water.
The world is changing faster than ever before. Netflix, Spotify, Uber, Airbnb are some examples of why the next generation will not need to raise the hand for a taxi.
What exactly is changing?
Technology is driving forces towards a new era. Computers, robotics, artificial intelligence, virtual reality and the story of TARDIS, the box that travels through time, is reality!
What that means for the global market, how technology is shifting the old economy and why Facebook, Apple, Amazon and Google are four of the top new economy companies?
When we use the term “old economy”, we describe the economic era which took place at the beginning of the twentieth century when industrial innovation started to expand in the U.S. and around the globe.On the contrary, when we talk about the “new economy” we describe the new, high-growth industries that are on the cutting edge of technology and they are forming the driving force of economic growth, raising and innovation.
“The new economy is commonly believed to have started in the late 1990s, as high-tech tools, particularly the internet and the increasingly powerful computers, made their way into the consumer and business marketplace.”
It all appeared as one very promising trend which increased dramatically the speed at which new products and services were being marketed at an ever-increasing rate.
Pokemon Game is an excellent case imprinting that speed. It took 19 days after the release of the app to cause addiction to more than 50 million users, in comparison to automobiles (62 years), the telephone (50 years), or credit cards (28 years). Thus, a massive shift from a manufacturing and commodity-based economy has been caused, to a new economy which is using technology and innovation in order to create new services, new products which will redefine the meaning of value.
“As new technologies are evolving at a faster and faster pace — and as they are adopted at record speeds by markets — it’s fair to say that future could be coming at a breakneck speed.”
But what happens with the rates and how do they affect the economic growth?
“The new economy threshold is related to the growth rates of a pure manufacturing and pure service economy. Whilst a pure manufacturing, or old economy, would grow at a rate “α”, a pure service or new economy will grow at the rate “(ε-1)”. With an elasticity of substitution close to unity, the new era threshold gets identical to a growth accelerating condition, (ε-1)>α. The development of a new economy is therefore a precondition for high economic growth.”
Facebook, Apple, Amazon, Google and many more have focused around the use and development of the internet, technology and the cloud.
The economic growth was immediate and nowadays billions of people are stay hyper-connected in an unprecedented global network. This constant interaction creates an ongoing debate on new ideas and innovations, future businesses. models, scopes, ethics and their value.
According to the “8 major forces” which shapes the future of the global economy, combining this connectedness with the rapidly changing demographics, shifting values and attitudes, it is growing political uncertainty, and exponential advances in technology, and it’s clear, the next decade is setting up to be one of historic transformation, where economy is constantly evolving.
We stand at the point where the system becomes complex and operates like an organic shape based on algorithms, shifting its shape and its properties. We have to set the priorities and type the code carefully in order to achieve a sustainable way of evolution and a social innovation.
So, better stop staring and take action, because you never know…maybe one day water will be more valuable than bytes, again!
Sources:
https://www.visualcapitalist.com/the-8-major-forces-shaping-the-future-of-the-global-economy/
https://www.investopedia.com/ask/answers/05/061305.asp)
https://www.targetinternet.com/making-money-free-apps-case-study/
https://evonomics.com/the-economy-isnt-a-machine-its-organic/
The New Way Of The Future: Small, Local, Open And Connected, Ezio Manzini
<https://pdfs.semanticscholar.org/2dce/b9b5ba8293a530ed0de01ea726afed648cc1.pdf> Knowledge Economy, Information Technologies and Growth,Edited by Luigi Paganetto
Del Castillo, Kim. “Pokémon’s Power.” 16 Dec. 1999 <http://www.clas.ufl.edu/users/jmurphy/JPT3500file/JPT.Projectfile/Jpt/Pokemon .html>
