information economy

Definition

Economy in which knowledge is the primary raw material and source of value. It is characterized by (1) convergence and integration of communication and data processing technologies into information technology (IT), (2) pervasive influence of IT on economic activity such that the most workers are information workers and most products are information products, and (3) application of IT networks throughout the economic institutions, organizations, and processes resulting in a very high degree flexibility, weakening of regulatory control, and acceleration of globalization. However, since every IT-based economy must coexist with a vast manufacturing sector in which knowledge is not the basic raw material, the claim that the new economy differs fundamentally from the traditional economy remains contentious. See also information society.