Nurturing the Accumulation of Innovations
Nurturing the Accumulation of Innovations
Lessons from the Internet
This chapter discusses the institutional roots of the innovations that led to the development of the Internet. Given the centrality of information technology and telecommunications to the modern economy, it is particularly intriguing to be reminded of the critically important role that the federal government played in the development of both sectors—and to be exposed to careful discussions of the institutional structures and strategic decisions that made public support so very powerful in both industries. The chapter explores how the use of Internet throughout the 1990s touched a wide breadth of economic activities. The diffusion transformed the use of information technology throughout the economy and led to improvements in products, lower prices, the development of new capabilities, and the development of many innovations that enabled productivity improvements among business users. It diffused to the majority of homes and businesses, altering the way people shop, research, play, and relate socially. The chapter divides the Internet's development into a precommercial and commercial era. These two eras illustrate two distinct models for accumulating innovations over the long haul. The chapter also outlines a few conditions necessary to unleash value creation from such accumulated lessons, such as standards development and competition, and nurturing legal and regulatory policies.
Keywords: Internet, innovation, economy, information technology, regulatory policies
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