The ascendancy of the Net economy
As we cross the threshold into the next century, human society is beginning its move from the industrial economy into the knowledge-based economy. The general trend is that the 21st century will be a new era of the knowledge-based economy. As mentioned in my previous article, the most notable characteristics of this new era of the knowledge-based economy is information-driven economic growth and globalisation. This article will deal with the information aspects of the knowledge-based economy.
In more specific terms, the application of information to the economy is best exemplified in the networking of communication, or the so-called Net economy. This Net refers to the computer network of satellites, optic fibres, cables and telephone lines that connect the whole world. With the click of a mouse, information from the other end of the globe will be transported to your computer screen at the dizzying speed of seven-and-a-half times around the earth per second.
Singapore has an early start in networking. If we deposit a sum of money at a particular POSB branch, we can withdraw our money from any other POSB branches in Singapore. This was an early step in networking. The networks of the future would have greater significance and implications.
Generally, there are two aspects of the Net. One is the networking between businesses and their customers. The other is the networking between individual businesses, or the regional and even global networking between industrial production and scientific research. The examples of the POSB and Internet shopping belong to the first aspect.
From a long-term perspective, Internet shopping is but a low-level aspect of the Net, and it is not likely to become the most important trend. After all, most merchandise are unsuitable for Internet shopping. Besides, if everyone shops on the Net, what will happen to our Orchard Road? Or New York's Broadway? A friend said if he were to force his daughter to shop on the Net instead of letting her shop at Orchard Road, the daughter would rather kill herself.
Therefore, the second aspect of the Net will be more important. Its significance goes beyond that of connecting businesses. There have been reports of simultaneous consultation of doctors from all over the world, surgery on the Net and cooperation in research and development made possible by the Internet. These are early examples of high-level networking.
The president of Intel, producer of the Pentium micro-processors, feels that the new synergy between computers and Net technology will have multiple implications for industry of the future. The sheer power of electronic commerce (e-commerce) will change the face of trade dramatically. Sporting goods company Puma was on the verge of bankruptcy back in 1992. From 1993, Puma began to diffuse its production, logistics and marketing divisions to 80 Net enterprises worldwide, and the results were spectacular. Puma was transformed from a sickly feline into a magnificent beast. The reason for this transformation is that intra- and inter-business electronic links greatly increase the efficiency of production, planning, the collecting of information and data exchange. As the business is rapidly being rationalized, production figures go up while costs come down.
The development of e-commerce may well bring the world into a brand new era of "electronic currency". With the emergence of a phantom electronic currency, everyone of us would be affected. At the moment, developed areas in Europe, the United States and Asia are already studying the possibility of an electronic currency. The main publication of the Association of Electrical Engineers of America even devoted a special edition to electronic currency.
Electronic currency is not only about currency. It refers to an entire finance system on the Net. It includes a virtual numeric currency, an electronic system of withdrawals, transfers and loans, and Smartcards (electronic purses) of all shapes and sizes. The appearance of an electronic currency system implies the emergence of "virtual banks" and "virtual enterprises".
Actually, the rudimentary beginnings of a virtual bank appeared in the US in 1995 as the Security First Network Bank, the world's first Internet bank. Although it is a small and insignificant bank, it represents the trend of the future. In time to come, we may even have to forsake the familiar paper currency.
As the Net pushes the economy ahead rapidly, the economy is also bringing the Net market forward, resulting in the Internet itself becoming the world's largest emerging market. Of course, this is just the beginning. Although there are many companies which made huge profits investing in the Internet market, they tend to be small companies, like Yahoo, which has been basking in the limelight for quite some time. To date, most companies are making losses.
The Net and e-commerce will foster a large number of freelancers, and this will affect social structure in a big way. The competition for technological superiority in the era of the knowledge-based economy will also be more intense. This will definitely promote greater (even global) and more efficient cooperation to maintain competitiveness. The highly efficient research and development work conducted on the worldwide Net is best suited for small and medium enterprises to band together and break the monopolies of the "giants".
It is not hard to see that within this new Net economy, especially with its electronic currency and virtual banks, lurks an imminent danger. The writer will elaborate on this danger after expounding the other characteristic of the era of the knowledge-based economy-- globalization.
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