WEIGHTLESS E-CONOMY
Copyright 1998 Business Line
Business Line
December 11, 1998
B. S. Raghavan
WORLD economy is truly becoming e-conomy! Everything is getting prefixed with e for electronic: e-mail, e- commerce, e-mall, e-currency and so on. Trillions of dollars move across the borders in a split second via e-bourses. You do not have to handle any concrete object at all for carrying out any transaction: Everything is done "online". Contents of letters, terms of offers, conclusion of contracts, purchases and sales are all done on the basis of what appears on the screens of computers without any qualms about their authenticity. Demats are only the latest, but by no means the last, example of economic instruments tending to become intangible, if not imperceptible (and, yes, incomprehensible!). Some other examples of "weightless goods" are computer software, financial products, the Internet, telecommunications, entertainment and management consulting. According to one estimate, these goods will account for a preponderant proportion of global gross domestic product; as of now, they form more than a quarter of the GDP of the US. The e-conomy as a whole, in short, is turning to be weightless.
Writing in the Spring 1998 issue of the Journal of International Affairs, Dr. Gavin Cameron puts it thus: "The defining feature of economic growth in the Information Age is the increasing weightlessness of output. Production and consumption are shifting away from objects towards information and services... Their key characteristic is that they are often infinitely expansible, that is, they can be used by many people at the same time. Another way to think of this is that once the good has been produced, it can be replicated at very low cost."
Economic players in India are yet to become fully aware of the implications of weightless e-conomy. The first is openness in the flow of ideas, data, capital, goods and services by means of digital and other (weightless) technologies. Many large corporations abroad have taken to imposing restrictions on access to e-mail, Internet, Intranet and so on, on the part of employees and outsiders, and the UK has even a Data Protection Act.
However stringent the measures to ensure privacy and security of e-transmission, there is no totally impregnable way of guarding against information and transactions coming, whether by design or accident, within the ken of unauthorised persons. Hence, chief executives have to assume a certain degree of "seepage" and should take or endorse no decision which does not satisfy the criteria of fair play, prudence and propriety. Openness in itself need not be harmful as it facilitates free exchange and transfer of technical knowledge and best practices. Everyday tens of thousands of computer users are downloading innumerable softwares updating their techniques and operations.
To what extent e-conomy will add to unemployment, especially of unskilled workers, is still a moot question. The answer to this is, of course, to establish networks of centers to impart skills relevant to the Information Age. The third and the most interesting fallout of weightless e-conomy is the possible slipping of a number of conventional avenues for taxation out of the hands of Government. And that may not be a bad thing after all!
You can email me at Gavin.Cameron@economics.ox.ac.uk
Last updated: 18 December 2003.
