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The Roots of the New Economy: An Institutional Perspective

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  • Pascal Petit

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Abstract

The factors behind the emergence of the New Economy are still poorly understood. In this article, Pascal Petit from CEPREMAP and CNRS in France provides an institutional perspective on the developmental phases or roots of this New Economy. He analyzes the structural, institutional and organizational changes associated with the New Economy and based on these developments assesses whether an acceleration of productivity growth, the touchstone of the New Economy, is likely to occur in Europe and whether it can be sustained in the United States. Petit identifies three structural factors as preconditions for the development of the New Economy: the rise in educational levels; the internationalization of economic activity; and the development and diffusion of ICTs. He argues that these preconditions have been established in developed economies and that institutional changes such as product and labour market deregulation have served as catalysts for growth. He then looks at the role of work practices and organizational relations, such as inter-firm partnerships, that build on structural and institutional changes to foster the emergence of the New Economy. Based on the fundamental changes that have already occurred, he concludes that an acceleration in productivity in Europe is likely, as is a continuation of strong productivity gains in the United States.

Suggested Citation

  • Pascal Petit, 2002. "The Roots of the New Economy: An Institutional Perspective," International Productivity Monitor, Centre for the Study of Living Standards, vol. 4, pages 39-54, Spring.
  • Handle: RePEc:sls:ipmsls:v:4:y:2002:4
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    File Function: version en francais, pp:42-56
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    References listed on IDEAS

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    1. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
    2. Jonathan Temple, 2000. "Summary of an Informal Workshop on the Causes of Economic Growth," OECD Economics Department Working Papers 260, OECD Publishing.
    3. Jonathan Temple, 2003. "Growth effects of education and social capital in the OECD countries," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 57-101.
    4. Angel de la Fuente & Rafael Doménech, 2006. "Human Capital in Growth Regressions: How Much Difference Does Data Quality Make?," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 1-36, March.
    5. Kevin J. Stiroh, 2001. "Is IT Driving the U.S. Productivity Revival?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 2, pages 31-36, Spring.
    6. 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.
    7. Raghuram G. Rajan & Luigi Zingales, 2000. "The Great Reversals: The Politics of Financial Development in the 20th Century," OECD Economics Department Working Papers 265, OECD Publishing.
    8. Michael T. Kiley, 1999. "Computers and growth with costs of adjustment: will the future look like the past?," Finance and Economics Discussion Series 1999-36, Board of Governors of the Federal Reserve System (U.S.).
    9. Patrick Bisciari, 2001. "Nouvelle économie," Working Paper Document 14, National Bank of Belgium.
    10. Andrew Sharpe, 2000. "The Productivity Renaissance in the U.S. Service Sector," International Productivity Monitor, Centre for the Study of Living Standards, vol. 1, pages 6-8, Fall.
    11. Rauf Gönenç & Maria Maher & Giuseppe Nicoletti, 2003. "The Implementation and the Effects of Regulatory Reform: Past Experience and Current Issues," OECD Economic Studies, OECD Publishing, vol. 2001(1), pages 11-98.
    12. Gilbert Cette & Jacques Mairesse & Yussuf Kocoglu, 2000. "La mesure de l'investissement en technologies de l'information et de la communication : quelques considérations méthodologiques," Économie et Statistique, Programme National Persée, vol. 339(1), pages 73-91.
    13. Giuseppe Nicoletti, 2001. "Regulation in Services: OECD Patterns and Economic Implications," OECD Economics Department Working Papers 287, OECD Publishing.
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    Cited by:

    1. Nayak, Purusottam & Mishra, SK, 2009. "Structural Change in Meghalaya: Theory and Evidence," MPRA Paper 15728, University Library of Munich, Germany.
    2. Silva, Ester G. & Teixeira, Aurora A.C., 2008. "Surveying structural change: Seminal contributions and a bibliometric account," Structural Change and Economic Dynamics, Elsevier, vol. 19(4), pages 273-300, December.

    More about this item

    Keywords

    New Economy; Post-1995; Productivity; Growth; Acceleration; Institutions; Knowledge; Skills; Information; Openness; ICT; Information ; Communication; Technology; Deregulation; Organization; Asymmetry; Structural; Institutional; Organizational; Changes; Change;

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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