Garcia, D. Linda. "The Architecture of Global Networking Technologies."



This paper asks the question; how will information technologies drive global economic activity?

Garcia’s report is provides an analysis of how the networked global economy might affect rural America’s economy. The report examines how networking technologies are evolving and what factors are driving the evolution. A historical perspective is given which illustrates how communication networks have been critical to economic conditions for hundreds of years. Garcia argues that today, it is the design, or the architecture of the network that will determine the economic impacts. Three possible hypotheses are explored:

1. The shift of power from the geographically-based Nation State to the Transnational Firm
2. New opportunities for non-metropolitan areas
3. The rise of global cities at the expense of regional economies

Garcia concludes it is plausible that there will be shifts of power and new opportunities for non-metropolitan areas. In contrast however, Garcia believes because of the flexibility of modern communications networks, the rise of global cities will not be at the expense of regional economies. Local places will redefine themselves and their roles in the economy in relation to the global economy.

Chapter 2

Modern information and communication technologies (ITC) can overcome barriers of time, space and place. For that reason many argue that non-metropolitan areas will be less disadvantaged in the future. The other side of that argument is that in a networked global economy, profit and growth will be more closely related to transaction costs, giving cities -- which benefit from economies of agglomeration -- the greater economic advantage over non-metropolitan area. And then there are those that believe that ITC’s will “deterritorialized” economic activities so as to generate a shifting of power from geographically bounded to transnational. Garcia suggests the variance in ITC motivated economic projections is due to a lack of clarification regarding the capabilities and characteristics of information technologies verses communication technologies; each will likely invoke a different set of socio-economic impacts. What is becoming evident is that today’s information based networks are becoming so flexible and configurable that their design, or architecture, can be used to either empower or weaken economic exchange. Garcia reminds us that it is the communication process itself that gives rise to socioeconomic opportunities and impacts, not the technology. Never the less, today’s networking technologies are affecting the way we communicate.

Chapter 2 of Garcia’s report lays out the framework for how communication networks are evolving, taking into accounts the technological, economic and political forces driving them. Garcia argues that unless the environment changes, these network technologies will enhance role of large important cities and diminish many of many non-metropolitan areas. In this scenario only the most important cities will serve as central hubs and access ramps to the global economy.

Included in the report is a discussion of communication network aspects that will be most influential in determining socioeconomic impacts. According to Garcia, these are the; components, architectures and capabilities.

Components are the basic elements of the network. The components determine the capabilities and the relationship among their parts they must work together for communication to take place.

The network components and the rules that govern how the components function within the network form a structure which constitutes the network architecture. It is the architecture of the network that controls the way communication takes place.

Network components and the architecture determine network capabilities, capacity, versatility and functionality that is, what applications, how much bandwidth, the mode of communications and what processes and procedures the network support).

The role of information and communication in the economy

The potential impact of network technologies can only be assessed if they are considered in relationship to their intended purpose and specific environment. As social, political and technological climates organize around the network economy, those who are best positioned to access information and employ it strategically will have advantage while those excluded will fall behind. Information and communication today, as in the past, are inherent in coordinating and sustaining most economic activities. Garcia provides a historical perspective of how advanced and tightly networked communications networks have been critical to economies for hundreds of years. For example, state political leaders of Venice in the late fourteenth century, partnered with the private sector to develop the galere da mercato, a vast shipping infrastructure. By controlling the transportation infrastructure (shipping) and restricting trade related information for the benefit of the merchants, Venice became the economic hub of European trade.

Anticipating changes in the networked economy

As modern network technologies evolve they promise advantages to the end-uses as well as to providers. The convergence of technologies, technological advances and the increased versatility of networks have enabled a broad array of multimedia services and applications that can be delivered virtually globally and to more people. Using common networks, providers are joining forces to reduce costs, add value and extend market bases. These evolving network and provider characteristics along with changing attitudes add up to advantages for the network user. From its inception the network known as the Internet, has had no one point of control, that is, no person or organization controls what information flows through the network, or what content is available or what applications can be used. The users of the Internet decide what information flows.

From a business perspective, economic performance and competitiveness will be dependent on the ability to effectively process and distribute information. As the economic value of information increases information will become a commodity. Network technologies are critical for conducting business on global scale. The impact of this new networked economic structure depends not only on the underling network technology but just as importantly on whether these new technologies can generate new transaction costs and are these new technologies accompanied by new organizational innovation and institutional mechanisms that help reduce transaction costs?

Loss of Embeddedness in a Networked Environment

Economic activities are dependent on a complex set of social and organizational relationships. Since the network technologies of today make it possible to conduct business and work from a distance, it is the network architecture that will determine the economic impacts. Depending on how the network is configured, the network can empower or weaken the position of those engaged in economic transactions. For the network to be of benefit to the economy, it must be flexible and open, with the freedom to mix and match networking components. Proprietary networks with closed standards will only serve to increase transaction costs.

Property rights will also have profound implications for the economy as they reflect and reinforce existing power relations.