The evolution of the New Economy: The digital economy
The digital economy has changed how businesses operate.
July 31, 2017 - Author: Crystal Wilson, Michigan State University Extension
Historical overview of Michigan’s transition from the Old Economy to the New Economy
The principles of the New Economy have greatly changed our economic environment in relation to how businesses operate and provide goods and services, and the structure of the labor force.
The article “A new economic age and playing field” provides a historical overview regarding Michigan’s transition from a manufacturing, old economy model, to the global new economy model. The article explains:
During the 2009-2014 recession, Michigan was the hardest hit and lost the most manufacturing jobs and population of any state, and had the highest unemployment rate. Michigan rebounded from the recession, but our economic rebound was not the same as in the past because the automotive dominance was not as significant as before the recession. The western world and many states made changes in the 1990s and 2000s to respond to the changing new global economy. The start of the 2009 recession brought the economic shift very abruptly to a head in Michigan, and Dr. Adesoji “Soji” Adelaja, the John A. Hannah Distinguished Professor in Land Policy and former director of the MSU Land Policy Institute, led the multi-faceted research effort to assist Michigan with its shift to the demands of the new global economy.
Research findings revealed:
- In the 2000s, most U.S. growth was attributable to the service, knowledge and advanced manufacturing sectors.
- Firms with the highest quality of knowledge tended to be the fastest-growing and most profitable. For example:
- Information-communications-technology industries were best in 2008.
- Service industries that were most integrated with global demand accounted for more than 75 percent of job gains in 2008, many of which were created by exports.
Evolution of the New Economy
Prosperity in the new economy involves more than capitalizing on knowledge assets. Prosperity involves increasing employment in those industries that are growing.
Today the principles of the New Economy are still very relevant and continue to evolve to meet the ever changing demands of the global economy. In the article, “Access to the digital economy and New Economy for everyone”, I provided an overview of the concept of the Digital Economy.
The digital economy is also referred to as the Internet economy. A key feature of the old economy was that location mattered. Companies wanted to be located near transportation, and the raw materials and labor they needed to meet the consumer demand and to be profitable. Inexpensive places to do business was a key feature of the old economy.
The article, “What is digital economy?” states, “The digital economy is taking shape and undermining conventional notions about how businesses are structured, how firms interact and how consumers obtain services, information and goods.”
Professor Walter Brenner of the University of St. Gallen in Switzerland stated, “The aggressive use of data is transforming business models, facilitating new products and services, creating new processes, generating greater utility, and ushering in a new culture of management.”
The new digital economy has changed the paradigm regarding how businesses are structured. As well as the resources or access to resources they need to be profitable. The digital economy has also changed the structure and importance of partnerships and collaborations within and across industries. Marketing and the distribution of goods and services to meet consumer demands has also changed in the digital economy. The article “What is digital economy?” provides examples of how the digital economy has changed the way businesses operate:
“Recently, TechCrunch, a digital economy news site, noted, 'Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.'
Those at Michigan State University Extension that focus on land use provide various training programs on planning and zoning, which are available to be presented in your county. Contact your local land use educator for more information.