By Robert E. Litan
In quite a few years, the net has had a visual impression at the day-by-day lives of many american citizens. however the contemporary dying of a number of the "dot coms" that symbolized the net revolution has raised caution flags approximately its destiny. in the past, dialogue of the impression of the web at the financial system has been commonly hypothesis. In past the Dot.coms, of the nation's most valuable economists articulate the expected fiscal influence of the web over the following 5 years. Drawing from specified examine carried out through the Brookings activity strength on the web and the Berkeley Roundtable at the foreign financial system (BRIE) net activity strength (see web page 10), Robert Litan and Alice Rivlin handle the Internet's capability affects on productiveness, costs, and industry constitution. The learn means that the main major fiscal effect of the web might be its capability to extend productiveness development within the current economy—with more cost-effective transactions, larger administration potency, elevated pageant and broadened markets, more advantageous advertising and marketing and pricing, and elevated patron selection, comfort, and pride. the best impression is probably not felt in e-commerce, yet relatively in quite a lot of "old economic system" arenas, together with health and wellbeing care and government.
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Extra resources for Beyond the Dot.Coms: The Economic Promise of the Internet
Perhaps as much as $27 billion a year could be saved if health insurance claims processing were shifted to the web, with improved speed and convenience thrown into the bargain. Medical record management is another area in which the Internet offers great potential not only for cutting costs, but for improving the quality and effectiveness of care. In January 2001 the Department of Health and Human Services issued comprehensive rules protecting the privacy of individuals’ medical records. It is still early to know if these regulations will constitute a significant barrier to the development of databases that can be accessed by a wide range of providers with appropriate authori- zation.
In short, to the extent that the Internet compresses profit margins throughout the economy, the benefits will show up in the form of lower prices to consumers—perhaps in a series of one-time gains—but not in added productivity. Nonetheless, a compression of profit margins throughout the supply chain is quite likely to enhance true productivity in another fashion. With less room for error, firms should be more focused on adopting the kinds of cost-savings measures, already described, that should reduce the quantity of inputs required to generate any given level of output.
This calculation hardly seems a useful exercise until a lot more is known about attitudes toward different modes of acquiring goods. In any event, however it may be measured in principle, in reality convenience afforded by the net does not now show up in the GDP data as a form of additional output, nor is it likely to in the future. Convenience therefore will not be included as a social benefit by the official statisticians who add up the productivity benefits of the net. More Choices The greater range of choice that consumers and business purchasers have in an e-marketplace stems partly from the ability of the net to bring distant and hard-to-find suppliers into the same market, thus broadening the choices available to buyers.
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