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Computer and the Economy


money computer economy

One way to forecast 500 years ahead is to look back 500 years. How is today’s economy different from its counterpart 500 years ago, and what does that difference suggest about what the economy will be like 500 years from now?.Markets and related economic institutions allow for efficient voluntary trade; since they’ve lasted for at least 10,000 years, I expect they’ll still be here 500 years from now. However,just as more and more economic activities were delegated to specialists in the last millennium, I expect that most market transactions in the future will also be mediated by specialists, though most likely in the form of computerized agents.

The greatest change in the past 500 years has certainly been the rate of technological progress. GDP growth has been a sequence of three technologies—hunting, farming, and industry—each of which has grown 100 times faster than its predecessor.The next transformation—possibly involving information technology, nanotechnology, robotics, and/or artificial intelligence—could move the doubling period of GDP from decades to weeks and is forecast to appear sometime this century.

About 500 years ago, each region of the world was relatively isolated. Advances in transportation and communications allowed civilizations to interact, creating tremendous cultural and economic stimulation. If extraterrestrials are out there, especially anywhere nearby, we should discover them in the next 500 years, thus opening up the possibility of interstellar trade, probably limited to trade in information. Another possibility is new intelligent life-forms on Earth based on electronic or biological forms. While life-forms evolving naturally have built-in desires to compete for mates, food, shelter, and resources, new forms may have radically different motivations. All these projections are predicated on the assumption that human knowledge continues to advance. If we started with a vantage point of the year 1 and looked forward to 1001, we would have seen almost no technological advance, at least in Western Europe. Indeed, by many measures, Western civilization retrogressed in that millennium. Progress is not guaranteed. Technology has magnified the power of individuals, but this power is a two-edged sword. As Bill Joy, chief scientist of Sun Microsystems, reminds us, a small number of unbalanced individuals can now be immensely powerful, threatening the existence of human life on Earth. Let us hope we find a way to manage technology so it can be used for the benefit of humanity and avoid this apocalyptic scenario.

Hal R. Varian ( is the dean of the School of Information Management and Systems and a professor in the Haas School of Business and in the Department of Economics at the University of California, Berkeley.



  • A computer is a machine that manipulates data according to a list of instructions.

    The first devices that resemble modern computers date to the mid-20th century (1940–1945), although the computer concept and various machines similar to computers existed earlier. Early electronic computers were the size of a large room, consuming as much power as several hundred modern personal computers PC.

    Modern computers are based on tiny integrated circuits and are millions to billions of times more capable while occupying a fraction of the space. Today, simple computers may be made small enough to fit into a wristwatch and be powered from a watch battery. Personal computers, in various forms, are icons of the Information Age and are what most people think of as "a computer"; however, the most common form of computer in use today is the bedded computer. Embedded computers are small, simple devices that are used to control other devices—for example, they may be found in machines ranging from fighter aircraft to industrial robots, digital cameras, and children's toys. The ability to store and execute lists of instructions called programs makes computers extremely versatile and distinguishes them from calculators. The Church–Turing thesis is a mathematical statement of this versatility: any computer with a certain minimum capability is, in principle, capable of performing the same tasks that any other computer can perform. Therefore, computers with capability and complexity ranging from that of a personal digital assistant to a supercomputer are all able to perform the same computational tasks given enough time and storage capacity.


  • It is difficult to identify any one device as the earliest computer, partly because the term "computer" has been subject to varying interpretations over time. Originally, the term "computer" referred to a person who performed numerical calculations (a human computer), often with the aid of a mechanical calculating device. The history of the modern computer begins with two separate technologies—that of automated calculation and that of programmability. Examples of early mechanical calculating devices included the abacus, the slide rule and arguably the astrolabe and the Antikythera mechanism (which dates from about 150-100 BC). Hero of Alexandria (c. 10–70 AD) built a mechanical theater which performed a play lasting 10 minutes and was operated by a complex system of ropes and drums that might be considered to be a means of deciding which parts of the mechanism performed which actions and when.[3] This is the essence of programmability. Nearly all modern computers implement some form of the stored-program architecture, making it the single trait by which the word "computer" is now defined. While the technologies used in computers have changed dramatically since the first electronic, general-purpose computers of the 1940s, most still use the von Neumann architecture.

  • Computers using vacuum tubes as their electronic elements were in use throughout the 1950s, but by the 1960s had been largely replaced by transistor-based machines, which were smaller, faster, cheaper to produce, required less power, and were more reliable. The first transistorised computer was demonstrated at the University of Manchester in 1953.[10] In the 1970s, integrated circuit technology and the subsequent creation of microprocessors, such as the Intel 4004, further decreased size and cost and further increased speed and reliability of computers. By the 1980s, computers became sufficiently small and cheap to replace simple mechanical controls in domestic appliances such as washing machines. The 1980s also witnessed home computers and the now ubiquitous personal computer. With the evolution of the Internet, personal computers are becoming as common as the television and the telephone in the household.

    Modern smartphones are fully-programmable computers in their own right, in a technical sense, and as of 2009 may well be the most common form of such computers in existence.

Types of Computers

Computers come in a variety of types designed for different purposes, with different capabilities and costs.


A microcomputer is a computer that has a microprocessor chip as its CPU. They are often called personal computers because they are designed to be used by one person at a time. Personal computers are typically used at home, at school, or at a business. Popular uses for microcomputers include word processing, surfing the web, sending and receiving e-mail, spreadsheet calculations, database management, editing photographs, creating graphics, and playing music or games.

  • Personal computers come in two major varieties, desktop computers and laptop computers:

    • Desktop computers
      desktop_computer They are larger and not meant to be portable. They usually sit in one place on a desk or table and are plugged into a wall outlet for power. The case of the computer holds the motherboard, drives, power supply, and expansion cards. This case may lay flat on the desk, or it may be a tower that stands vertically (on the desk or under it). The computer usually has a separate monitor (either a CRT or LCD) although some designs have a display built into the case. A separate keyboard and mouse allow the user to input data and commands.

    • Laptop or notebook computers
      desktop_computer They are small and lightweight enough to be carried around with the user. They run on battery power, but can also be plugged into a wall outlet. They typically have a built-in LCD display that folds down to protect the display when the computer is carried around. They also feature a built-in keyboard and some kind of built-in pointing device (such as a touch pad). While some laptops are less powerful than typical desktop machines, this is not true in all cases. Laptops, however, cost more than desktop units of equivalent processing power because the smaller components needed to build laptops are more expensive.

  • PDAs and Palmtop Computers
    palmtop-computer A Personal Digital Assistant (PDA) is a handheld microcomputer that trades off power for small size and greater portability. They typically use a touch-sensitive LCD screen for both output and input (the user draws characters and presses icons on the screen with a stylus). PDAs communicate with desktop computers and with each other either by cable connection, infrared (IR) beam, or radio waves. PDAs are normally used to keep track of appointment calendars, to-do lists, address books, and for taking notes. A palmtop or handheld PC is a very small microcomputer that also sacrifices power for small size and portability. These devices typically look more like a tiny laptop than a PDA, with a flip-up screen and small keyboard. They may use Windows CE or similar operating system for handheld devices. Some PDAs and palmtops contain wireless networking or cell phone devices so that users can check e-mail or surf the web on the move.

  • Workstations/Servers
    workstation-computer A workstation is a powerful, high-end microcomputer. They contain one or more microprocessor CPUs. They may be used by a single-user for applications requiring more power than a typical PC (rendering complex graphics, or performing intensive scientific calculations). Alternately, workstation-class microcomputers may be used as server computers that supply files to client computers over a network. This class of powerful microcomputers can also be used to handle the processing for many users simultaneously who are connected via terminals; in this respect, high-end workstations have essentially supplanted the role of minicomputers (see below). Note! The term “workstation” also has an alternate meaning: In networking, any client computer connected to the network that accesses server resources may be called a workstation. Such a network client workstation could be a personal computer or even a “workstation” as defined at the top of this section. Note: Dumb terminals are not considered to be network workstations (client workstations on the network are capable of running programs independently of the server, but a terminal is not capable of independent processing).


mini_computer A minicomputer is a multi-user computer that is less powerful than a mainframe. This class of computers became available in the 1960’s when large scale integrated circuits made it possible to build a computer much cheaper than the then existing mainframes (minicomputers cost around $100,000 instead of the $1,000,000 cost of a mainframe). The niche previously filled by the minicomputer has been largely taken over by high-end microcomputer workstations serving multiple users (see above).


Mainframes Computer A mainframe computer is a large, powerful computer that handles the processing for many users simultaneously (up to several hundred users). The name mainframe originated after minicomputers appeared in the 1960’s to distinguish the larger systems from the smaller minicomputers. Users connect to the mainframe using terminals and submit their tasks for processing by the mainframe. A terminal is a device that has a screen and keyboard for input and output, but it does not do its own processing (they are also called dumb terminals since they can’t process data on their own). The processing power of the mainframe is time-shared between all of the users. (Note that a personal computer may be used to “emulate” a dumb terminal to connect to a mainframe or minicomputer; you run a program on the PC that pretends to be a dumb terminal). Mainframes typically cost several hundred thousand dollars. They are used in situations where a company wants the processing power and information storage in a centralized location. Mainframes are also now being used as high-capacity server computers for networks with many client workstations.


super computers A supercomputer is mainframe computer that has been optimized for speed and processing power. The most famous series of supercomputers were designed by the company founded and named after Seymour Cray. The Cray-1 was built in the 1976 and installed at Los Alamos National Laboratory. Supercomputers are used for extremely calculation-intensive tasks such simulating nuclear bomb detonations, aerodynamic flows, and global weather patterns. A supercomputer typically costs several million dollars. Recently, some supercomputers have been constructed by connecting together large numbers of individual processing units (in some cases, these processing units are standard microcomputer hardware).
Please note: All of this talk of which computers are more powerful than others (i.e., mainframes are more powerful than minicomputers, which are more powerful than microcomputers) is relative for any particular moment in time. However, all classes of computers are becoming more powerful with time as technology improves. The microprocessor chip in a handheld calculator is more powerful than the ENIAC was, and your desktop computer has more processing power than the first supercomputers did.

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The economy is the realized social system of production, exchange, distribution, and consumption of goods and services of a country or other area. A given economy is the end result of a process that involves its technological evolution, civilization's history and social organization, as well as its geography, natural resource endowment, and ecology, among other factors. These factors give context, content, and set the conditions and parameters in which an economy functions. An economy does not have to be a specific size. An economy can mean the economy of a city (local economy), a country (national economy) or the world as a whole (international economy), provided that it is involved in the production of goods and services.

Economy Sectors:

  • Primary sector of the economy: Involves the extraction and production of raw materials, such as corn, coal, wood and iron. (A coal miner and a fisherman would be workers in the primary sector.)

  • Secondary sector of the economy: Involves the transformation of raw or intermediate materials into goods e.g. manufacturing steel into cars, or textiles into clothing. (A builder and a dressmaker would be workers in the secondary sector.)

  • Tertiary sector of the economy: Involves the provision of services to consumers and businesses, such as baby-sitting, cinema and banking. (A shopkeeper and an accountant would be workers in the tertiary sector.)

  • Quaternary sector of the economy: Involves the research and development needed to produce products from natural resources. (A logging company might research ways to use partially burnt wood to be processed so that the undamaged portions of it can be made into pulp for paper.) Note that education is sometimes included in this sector.

The Importance Of Computer In Economy

Where does computer fits in?

  • Business: A business (also called a firm or an enterprise) is a legally recognized organization designed to provide goods and/or services to consumers. Without nailing my points too far from computer itself, lets make one of the biggest Computer manufacturing company an example, I believe we all know The Hewlett-Packard Company, commonly referred to as HP,it has a technology corporation headquartered in Palo Alto, California, United States. HP is the largest technology company in the world and operates in nearly every country. HP specializes in developing and manufacturing computing, storage, and networking hardware, software and services. HP was founded by William (Bill) Hewlett and David (Dave) Packard that both graduated in electrical engineering from Stanford University in 1935. The company originated in a garage in nearby Palo Alto during a fellowship they had with a past professor, Frederick Terman at Stanford during the Great Depression. The partnership was formalized in 1939 with an investment of US$538 which has now grown into Billions of dollar.

  • Manufacturing: is the use of machines, tools and labor to make things for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale. The manufacturing sector is closely connected with engineering and industrial design. an example of a manufacturing company in Europe is BMW (Bavarian Motor Works) a German automobile and motorcycle manufacturing company, and we all know growth in technology equals growth in Manufacturing, production as well as in sales which indirectly is assisting the economy to grow. Since automobile companies like BMW make use of computer applications like Auto CAD to design their products, Computer is directly helping the industry significantly.

  • Banking: A bank is a financial institution[citation needed] whose primary activity is to act as a payment agent for customers and to borrow and lend money. It is an institution for receiving, keeping, and lending money in hopes of repayment (Excludes California). Computer sometimes seems as if its main purpose is banking alone since a Calculator which is a device for performing mathematical calculations is part of the first generation computers. Computer is a backbone to the banking industry nowadays because its able to perform mathematical calculations, Process, store data and also output the processed data. Due to the ability and capacity of computers banks are able to expand and satisfy the needs of their customers.

  • Entertainment: is an activity designed to give people pleasure or relaxation. An audience may participate in the entertainment passively as in watching opera or a movie, or actively as in games. If you have ever been to a student campus before, I am talking about locations like Europe, America ( USA in general ), Austrialia and maybe some part of Asia and Africa then I believe you know those students can not do without a computer. They use Computer almost for their everything like " Both online and offline Games, Chatting, Online Television and Radio, Students Forum, , ETC ", I could remember when my Lenovo laptop was stolen life was so hard for about two weeks without computer because I am an international student and I was using my Lenovo to stay in touch with the world, that was when I realized how pleasant a life with a Personal Computer is :). Portable computers can also help reduce stress and boredom while travelling because we can entertain ourselves through the help of our computer by watching movies or playing our favourite computer games.

  • Research: is defined as human activity based on intellectual application in the investigation of matter. The primary purpose for applied research is discovering, interpreting, and the development of methods and systems for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe.

  • Defence: The tactics and strategy of defending against attack.

  • Agriculture: refers to the production of food and goods through farming and forestry. Agriculture was the key development that led to the rise of civilization, with the husbandry of domesticated animals and plants (i.e. crops) creating food surpluses that enabled the development of more densely populated and stratified societies.

  • Internet: is a global network of interconnected computers, enabling users to share information along multiple channels. Typically, a computer that connects to the Internet can access information from a vast array of available servers and other computers by moving information from them to the computer's local memory. Without thinking too had about the importance of computer from the Internet perspective, without the computer you are using right now to access my Blog I bet there wouldn't be a way for you to find out some post like this exists. The Internet has made lots of things possible through the existence of data communication, its now possible for millions of people to make a living by working from home through the use of computer and its Internet, with the help of the Internet stock market traders are able to gather qualitative information about the past, the present and the future action and reaction of the market which in return allows them to trade effectively and maximize their profit, with the help of trading forums and vast varieties of Forex trading platforms millions of people are able to join the Forex market with few mouse clicks. Great Website like and are making millions of lives easy nowadays, statistically its said that atleast 200,000 users register daily to Facebook, so many visitors to my Blog comes on through Google. The Internet is not only connecting computers or other telecommunication devices but also connecting we Humans. The acting President of United States of America was able to gain the support of young voters through the help of the Internet, he knew young people tends to use their computers more than sitting in front of television to watch the latest polls or sitting beside a radio to listen to the news. Computer is changing the way we live, the way we think, even the way we view the world. with map we are able to travel virtually around the world, we are able to see places we have never thought of seeing before, Google map has help cut down the cost of travelling around the world since we can see the same places and read about it on our computers.

  • Telecommunication: is the assisted transmission of signals over a distance for the purpose of communication. In earlier times, this may have involved the use of smoke signals, drums, semaphore, flags or heliograph. In modern times, telecommunication typically involves the use of electronic devices such as the telephone, television, radio or computer. Computer is simply the best telecommunication device ever, because it do any work other telecommunication devices can do. Computer programmers have been able to developed complex computer programs that can make a computer do the work of other telephone devices. Lets take a look at the three examples bellow,
    9.1) A computer with a Television (TV) card and the appropriate TV application software can do what a television does.
    9.2) There are popular music Website like , radio , music ETC that millions of people visit everyday to watch and listen to their favourite musics which in return is eliminating the importance of a normal house radio or pocket radio ETC.
    9.3) Skype and Void computer software are somehow killing the sales and production of Telephone devices, you can easy download a Skype calling software from or voipdiscount from, install it in your computer and start to use your computer as your personal telephone device as well,of course it only depends on the portability of your computer, if you happen to own a very portable computer then Skype and the rest could eliminate your need of a normal mobile telephone or house telephone devices since you can " make and receive calls, send sms, chat with love ones, and even make use of the Internet with your computer ".

  • Employment opportunity: Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as: "A person in the service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed."

Microprocessors -> Semiconductors -> Silicon -> Ptype+Ntype = Diode -> Transistors -> Microprocessors chips = work , education, growth of the economy.

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