new economy

Term describing the way businesses adjusted their operations at the end of the 20th century to embrace changes in technology, such as the Internet and related developments, that impacted on productivity. Characteristics of the new economy include an emphasis on human capital, such as innovation, social networks, and knowledge management, rather than the physical and financial practices and assets that were core to the ‘old economy’. The new economy is information-orientated, and focuses on service and communication networks to facilitate business transactions.

In the 1990s the shift to this new economy was characterized by a large number of dotcom start-up companies which attracted significant amounts of venture capital interest and investments.

By the end of the 1990s many of the companies had collapsed. However, this was not perceived as the end of the new economy, as the underlying concept of the value of access to information had not been challenged, although the business models had.