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The new economy: reality and policy

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  • John Van Reenen

Abstract

This paper concerns the new economy (alias the knowledge-based economy). I examine the different meanings attached to the new economy term and the evidence surrounding it, concentrating on the upsurge in US productivity growth between 1995 and 2000. I argue that the reports of the death of the new economy have been greatly exaggerated. There is evidence that information technology has transformed the US economy and is thus likely to have a strong impact on the UK economy in coming years. I discuss how elements of public policy should adapt to these economic changes, both in terms of an overall framework and in applications to specific areas (technology policy, human capital policy, competition policy and industrial policy). The new economy is a place of hope and fear. The hope is that policy activism can cement in potential productivity gains; the fear is that government actions will not mitigate the seemingly ineluctable pressures towards social exclusion.

Suggested Citation

  • John Van Reenen, 2001. "The new economy: reality and policy," Fiscal Studies, Institute for Fiscal Studies, vol. 22(3), pages 307-336, September.
  • Handle: RePEc:ifs:fistud:v:22:y:2001:i:3:p:307-336
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    References listed on IDEAS

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    Cited by:

    1. Sylvie Paré & Kelogue Therasme, 2010. "Entrepreneurs in the new economy: Immigration and sex effects in the Montreal metropolitan area," Journal of International Entrepreneurship, Springer, vol. 8(2), pages 218-232, June.
    2. Paul Bishop, 2008. "Spatial Spillovers And The Growth Of Knowledge Intensive Services," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 99(3), pages 281-292, July.
    3. Jonathan Temple, 2002. "An Assessment of the New Economy," Bristol Economics Discussion Papers 02/542, Department of Economics, University of Bristol, UK.
    4. Theodore M. Mitrakos & Georgios Th Simigiannis & Panagiota G. Tzamourani, 2005. "Indebtedness of Greek households: evidence from a survey," Economic Bulletin, Bank of Greece, issue 25, pages 13-35, AUgust.

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