The 'New Economy' and the Old Problems. Prospects for Fast Growth in Postsocialist Countries

The 'new economy' provides a fresh opportunity to enhance growth. However, to turn such prospect into reality, the postsocialist countries - unlike developed market economies - need not only aptly utilise the potential of e-business, but first rais e efficiency of the 'old economy', since these two 'economies' are destined for a lengthy coexistence. JEL Classification : F43,03 Globalisation in the Internet Age The fourth industrial revolution is under way, connected with the prolife ration of information technology and the computerisation of nearly all spheres o f human activity. Over the time-span of a single generation - between 1970 and 2000 - the c ost of computing power dropped on an unprecedented scale: by a factor of nearly 50,000. Thirty ye ars ago, per- megahertz cost of processors stood at $7,600; now it is a mere 15 cents . The scale of the simultaneous reduction in the cost of RAM (per megabyte) was in the order of 30,000. In the case of data transmission, prices declined even more spectacularl y; sending a gigabyte of data is now 1,250,000 times cheaper than 30 years ago! Another aspect of this revolution has to do with the R&D in biotechnology and genetic engineering. The impact of these changes may be particularly great (in a matter of ten or twenty years) in pharmaceutics, making it possible to launch large -scale, and hence relatively cheap production of antidotes to many ailments that afflict mankind t oday. However, apart from the richer social strata in the most affluent nations, where the abrupt increase of life expectancy by five or ten years will not cause a public finance crisis, the remaining part of mankind is, regrettably, totally unprepared, in economic terms, to handle such developments .