“Information Technology and the World Economy” explores the impact of IT on business and economy. It asserts that IT has revolutionised the way businesses operate, leading to increased productivity and economic growth.

The paper discusses the concept of ‘complementary goods’ – products or services that add value to the primary product. It highlights how IT has amplified the significance of these goods, with software and databases being prime examples.

IT has also influenced the structure of businesses, enabling decentralisation. This has led to the rise of ‘virtual organisations,’ which are less hierarchical and more flexible, allowing for greater innovation and efficiency.

Moreover, IT has been instrumental in the creation of new markets. Online auctions, for example, have become a popular method of trading, with sites like eBay leading the way.

The paper also addresses the economic implications of IT. It argues that IT has contributed to the ‘winner-takes-all’ nature of the digital economy, where a small number of firms dominate the market.

Finally, the paper suggests that IT will continue to shape the economy in the future, with the potential to create even more profound changes. It emphasises the importance of understanding the implications of IT to make informed policy decisions.

Go to source article: http://www.almaden.ibm.com/coevolution/pdf/varian_paper.pdf