Beyond the Dot.coms: The Economic Promise of the Internet

Citation

Strader, J. (2002), "Beyond the Dot.coms: The Economic Promise of the Internet", The Bottom Line, Vol. 15 No. 3. https://doi.org/10.1108/bl.2002.17015cae.003

Beyond the Dot.coms: The Economic Promise of the Internet

Edited by Kay Ann Cassell and Marina I. Mercado

Beyond the Dot.coms: The Economic Promise of the Internet

Litan, R.E. and Rivlin, A.M.Brookings InstitutionWashington, DC2001

Keywords: Information technology, Economy, Internet, Economics

What now, after the dot-com bubble has burst? What long-lasting effect, if any, will the Internet have on our economy? To answer these questions, the authors, two leading economists, used a published report by the Brookings Task Force on the Internet as a basis for an analysis of the economic impact of the Internet and some predictions about the future.

The authors begin by presenting a discussion of productivity (as defined by the gross domestic product (GDP)), the problems of predicting productivity, the effect of the information technology (IT) revolution (which started long before the Internet), the contribution of the Internet to productivity growth in the 1990s, and other factors that have caused productivity to increase or slump over the past years up to the terrorist attack of September 11, 2001.

Next, the book takes a look at various sectors of our economy (manufacturing, health care, financial services, government services, education, retailing, and trucking), and evaluates how the Internet can be effectively used in each of these sectors. The conclusion reached from this analysis is that the main opportunity of the Internet to enhance productivity in the future will come from three areas:

1. 1.

   lower costs for transactions in traditional economy sectors;

2. 2.

   efficiencies in management of supply chains and business-to-business linkages;

3. 3.

   enhanced competition resulting in broadened markets for both buyers and sellers.

The Internet has deeply affected our society in ways that are not reflected in the GDP, of course, and the authors devote a chapter to these non-economic benefits as well. They feel that the Internet will likely continue to enhance quality of life by increasing convenience; giving us more choices; allowing for more accurate, faster and cheaper information flow; and allowing more people to telecommute and connect with others across distances.

Factors, which will determine the extent of the potential benefits of the Internet, are examined. How effectively the digital divide is bridged, Internet speed, security issues, privacy concerns, taxes on online sales transactions, and antitrust vigilance are all factors which will affect how much we can prosper from the Internet.

What this book is not: unlike the small avalanche of books in the mid to late 1990s, this is not a how-to-get-rich-off-the-Internet book. Instead, the book would be useful to policy makers, corporate leaders and economists. Its analysis of coming trends of Internet usage would also be of interest to educational leaders responsible for developing IT curriculums and to students planning for IT careers.

The book is succinct and scholarly but readable. The authors take time to explain economic concepts in lay terms. In the chapter on non-economic benefits of Internet usage, the authors did not mention any effect on the environment. Increased use of the Internet for communications, telecommuting, and video conferencing has a potential for reducing use of fossil fuels and increasing air quality. In the long run, this may result in a huge quality-of-life benefit. Overall, the book is interesting, thoughtful and encouraging in that it presents a positive picture of the future. Although the exuberance of the dot.com era may have subsided, the Internet will live on.

Jean StraderAssistant Branch Librarian, New Mexico State University at Alamogordo, NM, USA