The Internet Doesn’t Boost Economic Figures As Much As Some Economist Say It Does

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Posted by omeditors | Posted in Culture | Posted on 15-08-2015

Life before the Internet is just a blur now. How people functioned without a computer and a cell phone is a mystery now. Those years are the cave years of the 20th century. We were primitive creatures before the 1970s. We like to think we were sophisticated animals on top of the food chain, but in reality we were experiencing life like Neanderthals that rubbed two sticks together for no apparent reason. Economists thought the Internet would revolutionize the meaning of economic growth around the world and in one sense it has. But the Internet, even though it is the most innovation form of communication since the printing press, hasn’t lived up to economists’ expectations. That’s right. The Internet hasn’t done much to enhance the country’s GDP.

Economist and investor Christian Broda on oxfordjournals.org thinks the internet has helped investors take advantage of emerging countries investment opportunities, and it has helped investors react quicker to opportunities. But Broda, the managing director of Duquesne Capital Management agrees with other economists. In terms of GDP growth, the Internet hasn’t really helped that much. The big issue is the Internet doesn’t help productivity that much. It doesn’t help a manufacturing facility improve workers’ productivity, and that what has to happen before any meaningful GDP growth can be achieved. Broda calls it a production paradox because some businesses do become more productive using the Internet, but for others the Internet may be a disadvantage, and that creates a trade-off in terms of economic growth.

Economists did think that an Internet-driven growth age arrived in the late 1990s because productivity rates were higher than the years between 1913 and 1972. But the thought of a “new economy” faded quickly. In fact, the gains recorded during the 1990s were not as impressive as some economists said they were. That is commonplace in economic circles. Some economists say one thing and others say something else. The actual facts fall somewhere in the middle.

It may be too early to discount the effectiveness of the Internet when it comes to economic growth. After all, the Internet is still in its infancy. We all grow more astute and more productive with age, and so does the Internet.

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