ABSTRACT
What does the ‘new economy’ mean for South Africa? The answer depends in large part on what is understood by this trendy but vague term. Is the ‘new economy’ simply a catch-all phrase to describe the 1990s boom in the USA-or does it signify a new stage in capitalist development in which the conventionally understood economic laws no longer apply? The issue boils down to whether the extraordinary advances in computer technology and the Internet comprise a heartland technological revolution that is transforming the way in which entire economies function, or whether their powers of diffusion and transformation are more limited. For those who believe the former, it follows that high-income developed countries, being on the right side of the ‘digital divide’, will leap ahead on the basis of an absolute comparative advantage-whilst poorer, less developed countries, sink ever faster behind. The new (global) economy is thus portrayed as a place of increasing differentiation and absolute immiseration. For a middle-income country like South Africa (with reasonably good telecommunications and information technology) the issue thus becomes whether the economy clings to the coattails of the winners, or sinks with the losers.
