Old And New Economy
Economy could be old or new, depending on the technology employed. An economy involves a social system of production, exchange, distribution, and consumption of goods and services of a country. This could be measured through the exchange rate, inflation, unemployment rate, national debt, GDP, the balance of trade, etc.
The old economy is that economy that depends on crude ways of doing things, such as subsistence farming, trade by barter, etc. It is identified with developing nations and those that do not have access to modern technologies.
Features of Old Economy:
1. Time Consuming: It takes a longer time to get things done.
2. Labour-Based Economy: It takes many people to finish a task in the old economy, unlike in the computer age where a click and press can accomplish complicated tasks.
3. Method of Production is Mechanical: The old economy is operated with the power from an engine.
4. It is Constrained by Space, Time, and Distance: It is limited locally. It is not international. You cannot widen your horizon.
5. Means of Communication are Slow: Letter writing, trumpeting, gong, smoke signal, etc.
6. The system is Full of Errors: In typing or writing letters, designing by hand, etc, there will be many errors.
Limitations of Old Economy:
a. Time consuming/waste of time.
c. Time constraint.
e. Less effective.
f. Requires human effort all the time.
The new economy is the economy that is built on advanced (modern) ways of doing things. It is characterized by the rapid shift from mechanised activities to digital activities, carried out with the aid of information and communication technology.
The term “Information Age” has been in so much use in recent years, that you are expected to know what it means. It conjures up images of people, who make their living solely by pushing information about, such as lawyers and teachers, or programmers and stockbrokers. Others argue, that what makes today the information age, is the fact that so many people rely on computers, especially since the advent of the personal computer and the Internet.
Sociologists would have us believe, that the Information Age is one in which people are networked together, through technology, and rely on such things as television, radio, and computers with which to conduct their lives, creating a culture different from that which came before it.
Economists write that the Information Age is one in which either the computer sector, of the economy, is massive or the number of office workers doing knowledge work has been growing, providing an economy with more than its Gross Domestic Product. But here are you and I, having to make sense of what the Information Age is about.
Features of New Economy:
1. Digitalized Equipment: New economy makes use of ICT gadgets which are all digital.
2. Time, Space, and Distance are Irrelevant: ICT gadgets like GSM, ATM, Internet, phone, digital cameras used in the new economy make time, space, and distance irrelevant.
3. It is Technology-Driven: New economy is driven by scientific knowledge, unlike the old economy that is driven by power applied to machines.
4. It is Knowledge-Based: New economy makes use of information and skills, gained through education and practical experience.
5. It is Faster with Reduced Errors: In a few seconds, your email is sent to any part of the world, to those who have similar technology to yours.
Limitations of New Economy:
a. Poor technology.
c. Opens up a business to online security threats, including viruses and other software and hardware concerns.
d. Dependency on technology.
f. Increased risk of job cuts leading to poverty.
Benefits of New Economy:
1. Globalization: It has turned the whole world into a global village.
2. Digital Economy: Digital cameras, tape, videos, etc. have changed the economy of many countries.
3. Electronic Entertainment: Through the new economy, entertainment is now carried out electronically.
4. Job Creation: The old economy was labour intensive, but the new economy creates a lot of job opportunities.
5. Information Technology Driven: The new economy is information-driven, unlike the old economy that was powered by machines.
6. Low Capital Business Start-up: It is easier to start a business from the comfort of your home, using computers and ICT. For example, blogging, web design and app development, social media influencer, photography, etc. The old economy required heavy mechanised devices, and manual labour to start businesses.