The New Economy

--The economic changes new technology has set in motion are more interesting and important than the technology per se. --The technology makes possible new forms of employment, new approaches to compensation, and new ways of launching enterprises--what is often referred to as a Silicon Valley System --Note that this "Silicon Valley System" spreads across the country and the world, with nodes in Boston, Austin, Helsinki, Singapore, and elsewhere. --Leading-edge users and their innovative applications have …

…Producers lowered their costs by concentrating on what they did best, and contracting to buy the rest from those with a firm-specific advantage in productivity or a nation-specific factor cost-based comparative advantage. --The production dilemma has been solved via a finer division of labor--contract manufacturing and cross-national production systems. --Firms can outsource only because of better communications. In previous generations much tacit knowledge gained only through long experience was essential to creating the value chain.