NEW ECONOMY SPURS ENTREPRENEURSHIP

PROF. DR. KHAWAJA AMJAD SAEED*
Email: kamjadsaeed@yahoo.com
Mar 03 - 09, 2008

PRELUDE

The world is in dire need of entrepreneurial revolution. The wide spread use of micro credit, development of small and medium enterprises and use of various financial instruments for alleviating poverty continues to strengthen the rise of New Economy.

In this background, this pieces reviews the following aspects:

1. Names of "New Economy"
2. The Rise of "New Economy"
3. Manifestation
4. Entrepreneurial Spirit Spurred
5. Changing Trends
6. New Thanking
7. U.S Impact
8. Measurement of New Economy in US

The above aspects have been briefly reviewed below:

1. NAMES

"New Economy" has many names. Some call it "New Brand Economy". Others call it "Network Economy". "Information Economy" is another term used. All these terms connote the same meaning.

2. THE RISE OF NEW ECONOMY

It is generally believed that the term "New Economy" was first noticed in 1969 when guru of management, Peter Drucker, talked about "Knowledge Worker".

The other school of thought is that the above term was coined late in 1990s. This was generally understood in terms of USA and developed countries where transformation was noticed from industrialized world for producing wealth to service economy.

Moreover, after the WTO regime, globalization of business grew and with 150 plus countries which joined WTO, export and import businesses grew. Based on various World Development Reports including that of 2008, the trend of global exports is captured in the following box:

BOX NO. 1

GLOBAL EXPORTS TREND

YEAR

$T

PERCENTAGE GROWTH

2000

6.35

100

2001

6.16

97

2002

6.46

102

2003

7.48

118

2004

7.48

118

2005

10.39

164

2006

12.06

190

Currency fluctuations have been a matter of great concern. The fall of US$ across Euro and Yen has been keenly watched. With pressures of negative balance of payment, developing countries exchange rates have been declining.

Based on discussions held in World Economic Forum held in January 2008 in Davos, Switzerland, Central Banks do not seem to have effective control on inflation. This view was shared by 53% participants of the above Forum.

Simultaneously, contemporary developments in business and the economy have been taking place and thus New Economy has been emerging.

3. MANIFESTATION

The following points highlight manifestation of New Economy:

1. NASDAC is generally seen as a rival to New York Stock Exchange.
2. The focus is on financial market.
3. High rates of IPOs have been seen in recent times.

4. ENTREPRENEURIAL SPIRIT SPURRED

The rise of New Economy has seen spurring Entrepreneurial spirit. This is highlighted by the following factors:

1. Facilitation of E-commerce.
2. Payment of good wages.
3. Fall of prices every years.
4. Reduction of cost.
5. Increase in productivity.
6. Cut in inventories
7. One fourth to one third increase in growth in various sectors of the economy.

5. CHANGING TRENDS

There is a global shift and two conspicuous trends have been seen. This includes the following:

1. Information Technology

Information Technology has been driven by the some tools namely, fax machines, personal computers, cellular phones, Modems, Internet, digitalization of information, words, picture and data.

2. Globalization of Business

The WTO regime has been instrumental in the globalization of business. This trend has been strengthened by market forces, freerer trade and wide spread deregulation.

The older order had a crying need for restructuring and the new order has been having lesser impact of bureaucracy and watering down of middle management.

6. NEW THINKING

The concept of "New Economy" has wider connotations. This includes the following:

1. Outsourcing
2. Business Process Outsourcing (BPO)
3. Business Process Re-engineering.

Some believe that New Economy is a wishful thinking by Wall Street hypsters. Nevertheless, the debate is generally related to New Economy.

7. U.S IMPACT

The U.S economy was earlier impacted by growth of housing and autos. Now IT is driving the New Economy. On an average, eleven new IT companies are being established in one week in Silicon Valley in California, USA.

8. MEASUREMENT OF NEW ECONOMY IN US

For measurement of the impact of New Economy, five categories consisting of seventeen (17) indicators have been identified. The above five categories include the following:

1. Knowledge Jobs.
2. Globalization through Export Orientation and Increase in Foreign Direct Investment (FDI).
3. Economic Dynamics and Competition.
4. Transformation to Digital Economy.
5. Technological Innovation Capacity.