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Does the "New Economy" Measure Up to the Great Inventions of the Past?

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  • Robert J. Gordon

Abstract

During the four years 1995-99 U.S. productivity growth experienced a strong revival and achieved growth rates exceeding that of the "golden age" of 1913-72. Accordingly many observers have declared the "New Economy" to be an Industrial Revolution even more important than the Second Industrial Revolution of 1860-1900, which made the golden age of productivity growth possible. This paper dissects the recent productivity revival, subtracts out a cyclical component, and concludes that there is no revival of the productivity growth trend in the 88 percent of the private economy lying outside of the durables manufacturing sector. The paper explains this surprising finding by pointing to limitations in computers and the internet in comparison with the great inventions of the past.

Suggested Citation

  • Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
  • Handle: RePEc:aea:jecper:v:14:y:2000:i:4:p:49-74
    Note: DOI: 10.1257/jep.14.4.49
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    References listed on IDEAS

    as
    1. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-361, May.
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    4. Susanto Basu, 1996. "Procyclical Productivity: Increasing Returns or Cyclical Utilization?," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 719-751.
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    More about this item

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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