Don't Starve The Technology Goose
The U.S., indeed much of the global economy, is probably into the fourth or fifth year of what could potentially be a 10-to-20-year period of innovation-led growth. New advances in technology are about to impact the economy, from the mobile Net to "technology on tap," which would be a Net that delivers marketing, design, advertising, computing, and human resources via the Web. Consumer services will also be delivered by the Net, rather than through personal computers or computers at the office. Palm-like personal digital assistants, cell phones and any number of net-connected gadgets will deliver the goods.
The new style of computing and communicating will probably be even more disruptive economically and socially than the introduction of the PC in 1981. Instead of selling computers to people and companies, a vast network of data centers, looking perhaps more like electric utility power plants, will be supplied. Software will be delivered via the Web, along with virtually all the services available today, and then some new ones.
Corporate players that see the future are already benefiting. Nowhere is this clearer than in Europe, where the mobile Net concept was born and is most developed. Nokia Group is the clear leader in providing Web phones that are vital to a world where information is available at your fingertips. But there will be many new companies formed to take advantage of the new technology. Indeed, new startups are more adept at innovation than large, established companies. New companies, such as Loudcloud Inc., started by Netscape Communications Corp. founder Marc Andreesen, are already running services for corporations through the Net.
Investment for the Net infrastructure technology alone is expected to go from $150 billion in 1999 to $350 billion in 2003, according to Jupiter Communications Inc. Providing funding to pay for this infrastructure is key to future economic growth and job creation. Nurturing new high-tech startups with venture-capital money is critical. And providing capital for big corporations to adapt to the innovations is also essential.
The Federal Reserve and the European Central Bank, in their zest for containing inflationary forces, should realize that financing innovation is now a key element in promoting economic growth. There have been nearly 90 central bank tightening moves over the past year. Policymakers should take care not to go too far.