This was the case after the emergence of the railway at the end of the 19th century and the crash of 1929 followed on from the breakthrough of electricity and the internal combustion engine at the beginning of the 20th century. I do not intend to make an in-depth analysis of the causes here, but to point out that even very promising developments in the growth of productivity can live up to the profit expectations created during speculative bubbles. Monetary policy implications It is evident that large, IT-driven and IT-supported structural changes are underway and that these affect productivity and price levels in a way that needs to be taken into account when assessing inflationary pressure in the economy. We do not know how long the technological changes will have an effect, but I have every reason to believe that IT will affect developments in Sweden for the next few years, which basically comprises the monetary policy target horizon. On the other hand, there is in my opinion nothing to indicate that the “new economy” has invalidated any fundamental economic connections. At the same time, rapid changes such as those we are now experiencing involve greater uncertainty. No one can say with any great precision how productivity will develop over the next few years and how large a role IT will play in its development. This uncertainty is enhanced by the difficulty in measuring the IT sector’s significance as a result of shortcomings in Swedish statistics.
In addition, strategically important markets, such as telecommunications and broadcasting media have been opened up to competition. It is especially important that Sweden had a broad base of users of various technical systems at an early stage. A broad base is essential for users and producers to gain a real exchange from working in the networks comprised by the new technology. Ericsson’s successful broadening of its operations from fixed to mobile telephony and Sweden’s rapid licensing of first NMT and then GSM gave Sweden one of the world’s broadest bases of mobile phone users. The subsidised provision of personal computers to employees also broadened the user base and gave Sweden the highest PC density in Europe. This of course facilitated the use of the internet and thus the general e-mail revolution in Swedish companies and homes. The combination of internet usage and the high density of mobile phones means that mobile internet, despite its slow start, has already come further here than in the USA. Slide 4 shows a summary of Sweden’s position in various technological, network-based systems. As the internet is still in a phase of development, these figures can primarily serve as indicators of future growth. 4.