Greenspan: New Economy Benefits Rural Communities

It is "extremely difficult" to predict the impact of technical change on various sectors of the economy, Federal Reserve Chairman Alan Greenspan said in a recent speech on rural development. Greenspan's address made no mention of recent economic developments or of the outlook for monetary policy. Generally hailing the benefits of the new economy, Greenspan noted that as well as direct participants, "the consumer who has never touched a computer or thought about information technology is also seeing the beneficial effects, in the form of lower prices at the grocery store or other retail outlets than would otherwise prevail." Through channels such as these, "Efficiency gains get diffused widely throughout our economy, resulting in a broadly based increase in living standards," the central banker said in a speech made by satellite to the Center for the Study of Rural America conference in Kansas City. "Now we are in the midst of yet another great wave of invention and innovation, and rural America, like urban America, is certain to be swept along," Greenspan said. "Unfortunately, it is extremely difficult to predict how the comparative advantage of different industries and regions might ultimately change in response to broad shifts in technology. History provides ample reason for us to be cautious in this regard." One important change that has come with the new technologies, for example, is an increased capacity for separating the point at which a service is consumed from the point at which it is produced, he said. Greenspan also called for intensified efforts to increase the openness of foreign markets for agricultural products, "so that the full benefits of farm productivity gain can show through into increased market opportunity and farm incomes."