Michael Spence - "Information technology and the integration of the global economy"

The chapter titled “Information Technology and the Integration of the Global Economy” comes from the book The Next Convergence: The Future of Economic Growth in a Multispeed World written by Michael Spence.  In this chapter, he writes about digital communication and the effects it has on society and the economy.  The cellphone is the first piece of technology that is focused on.  Cellphones are becoming ever increasingly important in today’s world because they are our access points to the Internet and communication.  Spence talks about how land lines are not economically efficient because of the capital costs that are associated with it.  Cellphones have been becoming cheaper to own and operate because of the unanticipated growth which sprouted highly competitive environments that can have an effect on prices.  Network-based information technology is another topic that Spence discussed in this chapter.  He brings in an interesting point about how every electronic data base can potentially be accessed anywhere in the world by anyone who has the authority to do so.  He then says the only thing one has to work against is how much information they can process, not how much information there is out there that they can locate.  The introduction of network-based information technology has revolutionized the way things are done in the world and greatly increases productivity while decreasing wasted time by searching for things.  He brings in the idea of automation and explains how so many day to day tasks have been entirely replaced by network-based computers.  Sorting through all of the information out there and actually finding the relevant things has posed a problem with the introduction of the internet.  Search engines and their corresponding companies have stepped in and taken the opportunity to make a profit from all of this.  As a result there has been a huge shift from time spent searching for data to the time spent actually analyzing it.  There are however some negative aspects that come along with all of these powerful informational tools such as: money laundering, terrorism, coordinating criminal activity and identity theft. 

Michael Spence is an American Economist and is currently a professor of economics at the Stern School of Business at New York University.  He graduated from Princeton University with a degree in Philosophy and then went on to study Mathematics at Oxford University.  Throughout his long career, he is best known for his contribution of Signaling Theory.  This theory is about the idea that employees can send signals to employers about their ability levels based on certain educational criteria they meet.  Employers are willing to pay higher for people who show more ability. He has published other works with the topic of job market signaling.  The Next Convergence was published in May 2011.  This book is basically for anyone interested in how the global economy will change in the next fifty years.  Spence focuses on the accelerating growth in the developing parts of the world and how it has differed from the past.  The Economist describes this book as unsatisfying because Spence ultimately brings up more questions than answers about the impacts of globalization.