This process of capital reallocation across the economy has been assisted by a significant unbundling of risks in capital markets made possible by the development of innovative financial products, many of which themselves owe their viability to advances in technology. At the microeconomic level, the essential contribution of information technology is the expansion of knowledge and its obverse, the reduction of uncertainty.
Before this recent quantum jump in information availability, businesses had limited and less timely knowledge of customers’ needs and of the location of inventories and materials flowing through complex production systems. In that environment, decisions were based on information that was hours, days or even weeks old.