Information economy

Information economy is a loosely defined term to characterize an economy with increased role of informational activities and information industries.

The vagueness of the term has two major sources. First, not surprisingly, there is no agreed-upon definition regarding the threshold of when an economy is information economy and when it is not. This is partly due to the fact that research has been focused on various "increase" in informational activities, rather than the level it has achieved. It is rare to see a research seriously discussing if certain level of informatization in an economy is enough to lavel it as information economy.

Second, there are many different kinds of measurements of information-related economic indicators that are used by researchers. Contrastingly to the first problem, the second problem is not the lack of attention, but the lack of agreement among various opinions.

Two related questions are also noteworthy regarding the term. First, there is some argument, most notably by Manuel Castells that information economy is not mutually exclusive with manufacturing economy. He finds that some countries such as Germany and Japan exhibit the informatization of manufacturing processes. In a typical conceptualization, however, information economy is considered a "stage" or "phase" of an economy, coming after stages of hunting, agriculture, and manufacturing. This conceptualization can be widely observed regarding information society, a closely related but wider concept.

Second, there are numerous characterization of the transformations some of the contemporary economies are going through. Service economy, high-tech economy, late-capitalism, post-fordism, and global economy are among the most frequently used terms, having some overlaps and contradictions among themselves. The more closer terms to information economy would include knowledge economy and post-industrial economy.

One can also contend that the term "information" is not a clearly defined concept when applied to economic and social matters.

One's choice of conceptualizing the contemporary economy is also related to the expectations and policy and political imperatives that s/he has.

In the following, this issue is roughly devided into three areas: production, consumption, and transaction of information. Each section deals with the economic changes pointed out by some, as well as their consequences for our economy and society.

Production of Information

Production of information goods and services are said to be increased over the last decades. There are many different kinds of information industries, and many different ways to classify them. But here is one to illustrate the variety of what the term "information industry" may entail.

Media products such as television programs and movies, published books and periodicals would constitute probably among the most accepted part of what information goods can be. Some information is provided not as a tangible commodity but as services. Consulting is among the least controversial of this kind. Industries producing those goods and services are called information industries.

There are directly related industries to those core industries. First, telephone, broadcasting and book retail are typical examples of those industries which do not produce information but disseminate it. In addition, those industries handle predominantly information and can be distinguished from wholesale or retail industries in general. It is just a coincidence, one can argue, that some of those industries are separately existing from the more obvious information-producing sectors of the economy. For example, in the United States, as well as some other countries, broadcasting stations produce very limited amount of programs they broadcast. But this is not the only possible form of division of labor. If legal, economic, cultural, and historical circumstances were different, the broadcasters may well be the producers of their own programs.

Some services, such as legal services, banking, insurance, computer programming, data processing, and research, require intensive and intellectual processing of information. Although those services do not necessarily provide information, but they often offer an expertise in making decisions on behalf of clients. This kind of service industries can be regarded as a information-intensive part of various industries that is externalized and specialized.

Some manufacturers offer very research-intensive products. Pharmaceutical, electronic engineering, and many other "high-tech" industries belong to this type.

information industries as a high-growth sector Silicon Valley

information industries as a source of competition productivity paradox, high-tech

greater market for media industries for consumers and businesses

Consumption of Information

increased consumption of information

Transaction of Information

Increased role of information