Is The Internet Really The New Economy-IT Essay Sample



  1. Is the internet really the new economy?
  2. Indicate what you learned from doing your research this topic.Write this essay in essay format not Q&A format.  This essay should be approximately 2000 words long and be appropriately referenced. 



Is the Internet really the new economy?


Internet, as we know today, is the result of all works which have happened in the last seven decades. Today, from doing simple research, ordering goods and services, enjoying entertainment, interacting with society and culture, or meeting love, the Internet is everywhere. Nearly every human being on Planet earth is directly or indirectly using the Internet for its day to day life, only some of us know it, and some don’t. Unlike the earlier economies which depended heavily upon only industrial revolution, today the world is under a big change. The world economy has gone a big transformation, especially in the past two decades, where unemployment is decreasing, the world is experiencing lesser inflation, and the growth rate of world economies are on all-time high. [1] As per economist all over the world, these positives in the world economies are all due to unprecedented development in the sector of Information Technology. But how can one new service sector, improve the world economy which mainly comprises of sectors running on goods as compared to services? The new millennium of 2000 is the millennium of a new economy, and in this arrangement, a question is essential “Is the Internet really the new economy?”

Discussion and Analysis

Internet’s history can be traced back to 1950s when computers were going under great change and were improving. [2] By 1960s top economies of that time were including more such computational systems for improving the function of their research facilities, and around this time was laid the stone of ARPANET. U.S. Department of Defense wanted a system which could connect all its radar systems, stations, control towers, etc. This ARPANET will one day evolve to the present day Internet! Today every company, every country, whether it traditionally is an old economy company or not, are investing upon establishment of the INTERNET in their environment. The Internet is much different from the whole IT sector, as its adoption is much easier at both consumer level, client level and business level. This, not only satisfies needs of the Information sector but also makes companies relieve from such huge investment upon IT. In traditional thoughts, the internet is considered as a channel for sales and marketing. But in the past few years, especially the last five years have seen the growth of the use of cloud-based services. Especially, computational services and information storage facilities. These are all due to the internet, and they eliminate large investment and maintenance cost of heavy non-internet related IT goods. This basic working of the Internet, against the IT-based systems and links is, in its all essence, the new Internet-based economy![3]

Before knowing if the Internet is really the new economy, there is a need to understand what is Internet economy. In general, the Internet economy has some important components. The first component is three huge set of IP networks which are distributed all over the globe, and connect software applications, human resources and capital with each other. [4] This IP network evolves as an open and globally accessible environment where data and information can be easily accessed and transferred. Also, the Internet economy is the interconnection of various electronic markets each having their own medium of exchange of goods and services. All this are enabled by various applications and IP networks. Internet economy also includes various producers, online consumers, intermediaries which provide trust like e-commerce companies, and their certification and assurance. It also includes various e-currencies like Bitcoin or digital wallet cash which are being used for online transactions. Overall, the legal framework and policies which control each component of the internet economy, add to it too! The legal framework and policies are quite new to this internet economy. Also, the internet economy has been driven by three economic forces. [5] These forces are: lower transaction costs, positive network externalities and the interdependent relationship between Internet’s technologies with other two forces. Today, the Internet provides a gateway for selling goods, purchasing them, and also getting the real-time services linked to your transactions. This has led to a greater trust and has also led to much better economic development. These forces work in one more way. As expected, world data traffic is going to increase by 1000 times by 2020 to what it was a decade ago. [6] This increased data flow means, the bandwidth internet has to increase dramatically. As per experts, these changes will keep happening every decade or two, till the available bandwidth will be saturated. For more, this increase in bandwidth means that, more and more application developers and companies will move to develop newer technologies which can take advantage of that bandwidth. A larger bandwidth means, more powerful multimedia-based software could be used to provide high-end media rich content to everyone. It also means that now cloud-based services would be used at a much greater ease and speed. [7]

The important question of INTERNET being the new economy is evident today when we compare what defines new economy and how it is very efficient in comparison to our traditional running economy, of past, i.e. Old economy. Internet-based economies are evolving every day, and this changes the whole concept of earlier economies. Everyday innovation and development of new technologies, connecting people and exchanging technologies over the virtual global Village, and exchanging money across newer hands are clear aspects of this “new” economy! But before terming the Internet as the new economy, there is a need to understand a few things. Whenever a new technology comes, the economy changes a bit to accommodate that. If the technology comes with a whole new idea, the economy will undergo greater change. Regarding information technology, the Internet is the latest idea around which an economy is developing. It has evolved from the generation of the typewriter, mailing system, the telephone, radio, television, etc. The change has been so great, that a mail which earlier used to take 7 to 15 days across oceans, now takes few seconds! So, even though the internet is just an innovation, the innovation has had a greater impact. Also, in the decades of 1970s and 80s where the internet was only in its earliest of the stage as slow was computing systems. Economists of that era saw that even though Internet came, the economy wasn’t changing that much, especially in the productivity sector. But, economists of the current era are experiencing a greater change. Also, Internet is an open nature technology, is ever developing and evolving too. Many developers are using this vastly accelerating nature of internet for the deployment of various applications for many random or necessary works. This might seem a whole lot different than what digital economy is, but the reality is, digital economy comprises of both internet economy and IT industry economy. In the past decade, the Internet sector’s GDP has been the most accelerating one across the globe, where the Internet sector’s GDP has almost doubled in countries like USA, India, China, etc. But this development of internet GDP might seem misleading when the question as per topic is, Is the Internet really the new economy? Before we get answers for that, we must understand that with the coming of the Internet, not only a new sector has been made altogether, but the internet has revamped working of every sector. Every sector is using the Internet for its working. This has changed the way people work, generate money, utilise it, and the way the economy grows every day. Hence, there is a need to compare Internet-based economy against the old traditional economy. [8][9]

The old economy, as the whole world is still running has always had owners and controllers who owned all the economic power regardless of the total workforce. Workers under such economy used to build the foundation of that power but had little control over such power, and could only access higher power by loyalty. While, in the internet-based economies, the economic power isn’t confined only to the owners rather it gets diffused between owners and the much-skilled workers. As the Internet keeps utilising new and better innovations, the central command of every economy will need high skilled labours. Hence, with the coming of the Internet, skilled labour is a necessity. This change is also a key aspect of the internet, and it is as important as the development of conveyor belt system by Ford which had eventually ensured that the workers have low skill! Earlier, in old economies, like that of Automobile industry workers have had little skill, and this meant that they could never control the means of production, and eventually had no access to a higher power in the economy. But, in the new age, skilled labour is considered important, and so the workers get a fair share of the economy. Today, workers know their worth, and they tend to change their job preferences as per need. This is one change which can term INTERNET as being the new economy. In earlier days, a worker’s prestige and value depended on how long the worker has worked at a job in a company. Their career used to be certain with a certain skill and with a single company. Today, it is not seen. Worker’s prestige now no longer depends upon the longevity at a single job, rather their skills and ideas which they bring up on the desk. Their desires of better lifestyle have led to a great increase in the New economy, and this fits better with what the Internet economy is perceived as. [10] [11]

After comparison of work styles in both economies, there is a need to understand whether the internet economy’s growth has been increasing or not. When traditional or old economy’s growth is checked, there is need to check the performance of each of its components which are raw material availability, quality of labour and their demand, transportation infrastructure, management, etc. All these components are entirely different and way too complex, to sum up. While the Internet economy’s performance can be evaluated easily on the four-layered model. The four-layered model of the internet has following components: Electronic Network, Applications, intermediaries and Online transactions. Also, its infrastructure is easier to accommodate. The Internet’s infrastructure has only two layers. The first is Global high speed, IP based networks along with Internet’s Applications. The second layer of the Internet’s infrastructure comprises of various services such as training of employees, consulting related services and integration services. The four-layered model of Internet economy is an interdependent one. This means that to improve the Internet economy, the balance is to improve. Also, this means that for improving internet economy, any layer can be developed, and it will generate ripples of growth in the other sector. This is much easier to be developed against the old economy where each layer was entirely different. The internet economy works as an ecosystem which is easier to control. So, if we make development in the existing IP based electronic network, and create applications which can utilise such a network in a better way, we can provide much better services as being intermediaries, and thus the online transaction of both money and content will improve. The best example can be seen with the increase of Internet-based entertainment, with coming of services such as Amazon Prime, Netfk6, Hulu entertainment, etc. These all services came only because of better broadband services, new IP connections, and devices which can utilise such content. Apart from the development of the Internet economy, these four layers also send ripples in many other sectors which benefit because of the development of the internet economy. [12]


Internet, as per its demand and utilisation along with the economy it focuses on is certainly on its way to being the New Economy. There is no doubt that it has changed the way of working of economies, as it is quite different from what earlier economies used to offer. It’s working, its ecosystem, its users, and its reach is all that makes the Internet the new economy! Yes, the internet is really the new economy, which is here to stay and develop other sectors of the world economy with it.


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