The establishment of a new paradigm

As presented previously, a new paradigm, to be considered at work, the changes brought by it must be adopted by the institutional setting (economic, political, and social). So before the characteristics of this new paradigm are discussed, and the implications to the world economy and firms, it is needed to present the changes brought by the paradigm and its impacts on the economic, political, and social institutions. It first requires a clarification of what is meant by institutions. To do so, the literature on institutional economics, particularly the text by Hodgson (1998) will be used.

This literature’s core ideas concern institutions, habits, rules, and their evolution with a strong emphasis on localized historical approaches, rather than one ‘explains all’ theory. Nevertheless, it analyzes different levels, from the individual to shared concepts in society. Institutional economists understand institutions in the broad sense of the word:

Institutions are regarded as general regularities in social behavior or ‘the rules of the game in society or… the humanly devised constraints that shape human interaction’. (…) They encompass not only simply organizations – such as corporations, banks, and universities – but also integrated and systemic social entities such as money, language, and law. Institutions are both ‘subjective’ ideas in the heads of agents and ‘objective’ structures faced by them (Hodgson, 1998, p.p. 179-181).

Using this definition with the preconditions to a paradigm to be at work (presented on the previous section) it can be said that a paradigm shifts when not only organizations but also integrated and systemic social entities adopt the changes brought by it. Therefore, this section follows presenting a set of evidences that ICT are incorporated in the daily routine of people and organizations alike.

Worldwide semiconductor market by region, 1990-2009 (USD billions, current prices)

Worldwide semiconductor market by region, 1990-2009 (USD billions, current prices)

Source: OECD Information Technology Outlook 2008

One of the main raw materials to the production of ICT components and equipments are semiconductor materials. They are used to produce integrated circuits that go on computers, handhelds, mobile phones, and other electronic devices. The raise in the world market of such materials provides evidence of the growing demand for ICT products. The semiconductor market have grown from US$ 50 billions in 1990 to almost five times this number in 2008 reaching close to US$ 250 billions (OECD, 2008). This is confirmed by the growth in the world trade of ICT goods that jumped from US$ 1 trillion in 1996 to almost US$ 4 trillion in 2007. Figure 2.2 also shows the spread of electronic goods into other markets outside the OECD, further escalating the introduction of the ICT paradigm into other economies.

World trade in ICT goods, 1996-2007 (USD billions in current prices)

World trade in ICT goods, 1996-2007 (USD billions in current prices)

Share of ICT specialist occupations in the total economy, 1995 and 2007 (%)

Share of ICT specialist occupations in the total economy, 1995 and 2007

Source: OECD Information Technology Outlook 2008

Another indicator of the emergence of the new paradigm is the growing percentage of ICT specialists. This indicates the concern of firms to enhance their information systems to support their activities. Adding this to the former two indicators presented it is possible to affirm that firms – one of the institution examples presented by Hodgson (1998) – have adopted the novelties brought by the new paradigm.

However, not only firms have adopted them. Families are increasingly installing internet connection at home, what is indicative of a growing interest in using the communication technology not only for professional purposes. This can be argued to be an indicator that the internet has become part of social relations.

Household access to the Internet in selected OECD countries, 1996-2007 (%)

Household access to the Internet in selected OECD countries, 1996-2007

Source: OECD Information Technology Outlook 2008

Furthermore, it is hard to identify one type of information transaction that may not be done over the internet. It has affected the way people and firms alike handle money, shopping, personal relations, financial transactions, finding their way around cities, and even language is being affected by the new forms of communication. Governments are still finding ways of legislating to include digital interactions in their constitutions and codes.

The variety of applications made available over the web goes from newspapers making their products available online to social networks of friends and co-workers, passing through real state brokering, access to clinical lab results, and even governmental institutions such as ministries, congresses and senates are presenting their work on the world wide web.

These numbers may not be considered proof of the installment of a new paradigm. However, they all indicate the adoption of the information and communication technologies by firms, people, and other institutions. This provides evidence that the conditions in the previous section are fulfilled.

REFERENCES:

Hodgson, Geoffrey M. (1998): The Approach of Institutional Economics. Journal of Economic Literature, Vol. XXXVI, pp. 166-192.

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2 Respostas to “The establishment of a new paradigm”

  1. Fabian, Asbjoern, Michal, Gosia, Anne, Krysia Says:

    Hi Marcelinho!!!!!! We miss u much in Poland!!! We are drinking one for you now and we’re waiting for your arrival in Europe! 🙂 We hoped that we could talk to you on skype, but apparently you have some other occupations this night 😉 Love u man and stay classy – of course we already watched Anchorman:D hugs and kisses Krysiunia and the rest of the drunk group :****

  2. "Near Zero Pricing" for Voice is Not the Problem it Appeared to be, in 1993 » Says:

    […] In fact, even dial-up Internet access was at such a low level it was not tracked by some firms at the time, such as the Organization for Economic Cooperation and Development. […]


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