The United States has outsourced a good deal of the production to less sophisticated countries with lower cost structures, with the result that the United States now has the largest deficit in trade in ICT of all countries.5 This, I think, helps make the point that a policy of trying to direct resources into ICT, particularly its production at the expense of other aspects of the economy, could be self-defeating.
It would be all the more disappointing if such a policy were sold on the grounds that it would be a constructive response to the current fall in the exchange rate. Perhaps the biggest weakness with the “new economy” argument as an explanation of exchange rate movements can be found in the recent behaviour of the US dollar and US investments.