Many East Asian nations look to the New Economy as a possible cure for their recent economic ills, but they are short of good prescriptions. The term was coined to describe the decade-long economic expansion in the United States that was hard to explain on the basis of old economic theories. Lack of theories has led people to believe in its verity because of the conspicuous changes that information technology has brought to the business world and to society at large. Nowadays IT is widely acknowledged as the major engine of the New Economy.

This notion has led the Japanese government to place its hope for economic revival on the development of nationwide information highways. If true, the notion offers developing nations little help in their quest for economic policies and strategies to take part in the New Economy and to share the prosperity it is supposed to bring. The changing economic outlook for the U.S. has come just in time to take stock of such a technology-centered view of the New Economy.

Technology may develop, but economy evolves. Two evolutionary forces are at work, namely globalization and accumulation of money or investment capital. The growth of pension funds in advanced economies alone would suffice to appreciate the latter's magnitude. Globalization has enabled capitalism to work to its full potential, allowing capitalists to exploit every possible investment opportunity and to accumulate greater wealth.