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.

Old Economy:

The old economy may refer to the economy of the 20^th and 19^th centuries which were dominated by manufacturing and agriculture industries. Most activities were mechanised, without the use of modern information and communication technologies (ICT).

It is still identified with developing nations and those countries that do not have access to modern technologies.

Examples of old-economy industries include steel, agriculture, and manufacturing.

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. A lot of physical labour was also required for tasks. e.g. subsistence farming.

3. Method of Production is Mechanical: The old economy is mechanically driven and operated with engine power.

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.

b. Costly.

c. Time constraint.

d. Tedious.

e. Less effective.

f. Requires human effort all the time.

New Economy:

The new economy is the economy that is built on more 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 new economy was seen as a shift from a manufacturing and commodity-based economy to one that used technology to create new products and services at a rate that the traditional manufacturing economy could not match.

Information technologies, the Internet, and high-tech companies, in the backdrop of globalization, are responsible for crafting this entirely new type of economy.

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, phones, and 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 which 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.

b. Underutilization.

c. Opens up a business to online security threats, including viruses and other software and hardware concerns.

d. Dependency on technology.

e. Addiction.

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 which 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.