Services and the New Economy: elements of a research agenda

In developing and advanced economies job creation continues to be led by various services. A New Economy is being created, which is challenging the geography of the Old Economy. The Old Economy has been dominated by corporations headquartered disproportionately in the 'Global Cities' and large agglomerations. The New Economy is being built around smaller enterprises distributed in a much more dispersed geography. The New Economy has job creation centered in services, but relies on the Old Economy for physical capital and a portion of demand. The location of business activity in the New Economy can be much more contingent on the desires of entrepreneurs, and is far less tied to the cost-based logic that has shaped and reshaped the distribution of industrial capacity in the Old Economy. The New Economy relies to a growing extent on telephonic-based networks for production and delivery, but it also has leading-edge layers that require face-to-face human contact in the production process. At the same time the Old Economy is becoming ever more directed by production processes less tied to localized human skills, and in the process is shedding labor demands. The New Economy is exploding in its industrial composition, challenging researchers to define its new industries (such as establishments with only.com,.org,.gov, or.edu Internet addresses), and the extremely rapid division of labor in unstandardized services such as management consulting and software engineering. The Old Economy is clearly responding to these developments in the New Economy, and restructuring is occurring globally. Research is needed speaking to these trends, and the primary purpose of this paper is to issue a call for work of this type. The paper identifies priority needs from a theoretical perspective, as well as describes badly needed empirical work on the New Economy.