Analytics of information and empirics of the information economy

This paper reviews some of the salient analytical contributions of micro information economics, or market uncertainty. It contrasts the prolific growth in research in micro information economics with the relative neglect of the study of macro information economics, or technological change. The paper contends that macroeconomic structures are in the process of rapid structural change because of the impact of modern information technologies. The explosion in transborder data flows and the collapse of natural monopolies in telecommunications substantiate the claim that economies of the world are in the grip of an information revolution. The paper outlines an algorithm, based on input‐output economics, to measure the size and the structure of the information sector in any macroeconomy in a cost‐effective manner. It uses the data generated by the algorithm for a sample of economies and various types of production functions to explore the question of efficient use of information and noninformation resources. The paper concludes that the generation of data for the analysis of the information economy will facilitate the formulation of appropriate macro development strategies for an information era