Weightless Economy - Explained
What is a Weightless Economy?
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What is a Weightless Economy?
Weightless economy includes the products and services that cannot be seen or touched. Some of the examples of products that a weightless economy includes are computer software, intellectual property, music, movies, etc. Firms that manufacture and sell products and services that are intangible have bigger potential to grow steadily, and reap bigger profits owing to the uniqueness of the products. The features that makes these services and products unique and distinct are:
- There is a huge cost of development involved in a weightless economy. For instance, the production of music or software have a huge amount of up-front costs involved.
- A weightless economy's reproduction expenses are less. After the final product is created, it becomes easier to reproduce the service based on demand. For instance, collaborating with a distributor online.
- There is no limit on distribution in a weightless economy. For example, when a song gets posted or published, it becomes readily available throughout the world for downloading and buying.
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How does a Weightless Economy Work?
There are many areas that the weightless economy involves. Some of them are IT, patents, trademarks, copyrights, online media libraries, biotechnology, etc. Weightless economy is referred to as a component of a knowledge economy or the trading of intellectual capital. Instances of products in a knowledge economy include research and databases. The term weightless economy was originated by Danny Quah, the Professor of the National University of Singapore in 1999. He came up with this term in response to the steady changes that the economy was experiencing. In this time period, there was a decline in production jobs, and a rise in service jobs. There was a positive impact on the gross domestic product because of the emergence of information technology and intangible items. As per the economists, the intangible nature of the changing economy started an era of the New Economy or a digital economy.
Examples of weightless economy
A weightless economy, in the absence of primary economic resources, can create wealth in an effective manner. People can utilize their specific qualities and skills for producing non-material products and can further distribute them without incurring too much costs. For instance, a person who is good at coding can create a mobile application, and earn amazing profits in a weightless economy. However, initially, the coder will be incurring expenses related to the start up, hiring and training software developers, launching the application on the App Store, Playstore, etc., and then promoting the final product in the market. After the production process gets completed, there will be no such restriction on its distribution or selling. And, this will pave the way for unlimited profits. For instance, a student at Brigham Young University named Garrett Gee, devised a barcode scanner application Scan in 2011. In 2014, he was able to sell the same application to Snapchat for a whopping amount of $54 million.
- Macroeconomic Frameworks
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- Productivity Economics
- One-Third Rule
- Gross Domestic Product (GDP)
- Durable and Non-Durable Goods
- Weightless Economy
- Intermediate and Final Goods or Services
- Nominal GDP
- Converting Nominal to Real GDP
- GDP Inflator
- Nominal GDP Price Index
- Measuring GDP
- Gross National Product
- Net National Product
- Factor Income
- Gross National Income
- Expenditure Method
- The Problem of Double Counting GDP
- Double Counting
- Why is Tracking Real GDP Important?
- Convert Currencies with Exchange Rates
- Convert GDP to a Common Currency
- Per Capita GDP
- GDP Per Capita
- GDP as a Measure of Society Well-Being
- Limitations of GDP as a Measure of the Standard of Living