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Final Exam
This exam has three sections. Sections 1 and 2 are each worth 40% of the final exam grade. Section 3 is worth 20% of the grade. You are to pick ONE question from EACH of the sections and write a concise essay answering it. The quality of an answer depends on the quality of the argument you make and defend in light of empirical evidence and competing theoretical perspectives. Use the class readings and subjects covered in lecture (including guest lectures) to support your analysis and argument. You may bring in information and examples not in the reader or class discussions, but they must reflect an understanding of the assigned readings.
You
should spend the amount of time indicated for each section. Be sure to read the
questions carefully so you understand what is being asked and then answer it
directly. You should take at least a
few minutes to organize your thinking and outline an answer before starting to
write. There are no trick questions
here. Good luck.
These questions concern the
emergence, spread, and character of the Internet and the digital economy. They focus on the distinctive origins and
attributes of the Internet and the digital economy and their practical and
theoretical implications.
1)
Brad
DeLong argues that the spread of information goods has the potential to fundamentally
transform the economy. Markets function
well as resource allocation mechanisms when goods are 1) rival, 2) excludable,
and 3) transparent. Information goods,
however, are generally 1) non-rival, 2) non-excludable, and 3)
non-transparent. DeLong argues that
these characteristics of information goods undermine markets’ abilities to
allocate resource efficiently. Why are
markets thought to fail more frequently as information goods spread? Is this a useful lens through which to view
diverse economic and policy developments in the digital economy? Discuss two or three concrete examples of
attempts to maintain or reestablish rivalness, excludability, and/or
transparency in the digital economy.
What are the politics of these attempts and who would reap the
benefits and who would pay the costs?
2)
“The
Internet was initially a revolutionary technology because it fostered
innovation outside the market and established centers of power. Unfortunately, the commercialization of the
Internet threatens to undermine this very quality.”
Agree or disagree with this statement. In explaining your position, make sure to
discuss the relationship of network architecture and innovation potential. Support your position with concrete examples
and with reference to the views of contending critics discussed in this
course. Why do some people believe the
basis of the Internet’s astonishing innovation potential might be
vanishing? Identify the developments –
technological, market, policy, and/or social – that have been alleged to
threaten the Internet’s ability to foster radical innovation, and explain
whether these threats are real or illusionary.
If they are real, what could and/or should be done to counter them?
3)
“Modern
economic history can be read as a succession of new production paradigms,
fueled by economic competition among the regions of the world. Each new production regime is therefore
always the product of the political institutional context in which it evolves.”
In responding to this statement, situate the
Internet-spurred move toward “digital production” in the broader context of
successive waves of production innovation and international market
competition. Is it sensible to view the
dot.com revolution as an American response to previous production innovation in
Europe and Japan? Is it true, for
example, that the Internet is a peculiarly American phenomenon that is unlikely
to have occurred elsewhere? If so, what
are the characteristics of the emerging Internet-based “digital production
paradigm” and how have distinct American political and economic institutions
shaped it? Lastly, what does the
argument captured by the statement imply for the next round of production
innovation?
4)
Digital
e-commerce technologies have been described as a set of tools, “tools for
thought.” These tools, naturally, can
be employed in many different ways.
Critically assess the claim that e-commerce tools are in fact employed
differently across firms, industries, and nations. Drawing on examples from all three levels (i.e. variation across
firms within the same industry, across firms in different industries, and
across firms in different countries), characterize the observable patterns of
variation. How would you begin the
process of explaining such variation?
What variables would have to be considered?
Section 2: One Hour (40%)
How is the E-conomy
governed? How can it be governed? These questions implicate both the specific
policy issues we have covered in this course as well as the government, market,
technological and normative regulatory resources that are brought to bear on
the E-conomy.
Choose ONE of the following
questions:
1)
Discuss
the relationship among intellectual property, competition, and the public’s
access to information. In particular,
assess how competition and intellectual property rules affect the public
availability and use of information.
Have these relationships fundamentally changed with the advent of
digital communications networks and, if so, how? In addressing this broader question, answer these more specific
questions: First, how might digital
communications networks increase
public access to and use of information?
Second, what threats do
digital communications networks pose to public access to and use of
information? Third, which policy and
structural developments will likely lead to one outcome or the other?
2)
Why
has the debate over personal privacy emerged as a critical public policy issue
in the digital age? Have digital
technologies merely enhanced the ability to collect and process personal
information or have they qualitatively changed the debate about appropriate
levels of privacy? How have different
societies responded to the privacy challenges posed by digital technologies? Lastly, how might a vast expansion of government
electronic surveillance in the wake of the terrorist attacks on New York and
Washington recast the debate over privacy in the advanced industrial societies
once more? In your answer, make sure to
consider competing commercial, consumer, and government interests in the debate
over privacy, and assess how technology can facilitate privacy intrusion as
well as privacy protection.
3)
Many
believed the Internet and digital technologies would render states powerless
and eventually make them obsolete.
Cyberspace libertarian John Perry Barlow, for example, famously declared
in his Declaration of the Independence of Cyberspace that governments do
not “possess any methods of enforcement we have true reason to fear.” These arguments resonated well with
“globalization theorists” who saw the globalization of production, investment
and markets themselves as undermining state power and authority.
Are states really going out of business? In formulating your answer, give examples of
how states have responded to both domestic and international policy challenges
raised by digital technologies. Have
states been innovative in their responses or has responding to digital
challenges been pretty much “business as usual”?
4)
Imagine
the following situation: after graduation, you embark on a trip around the
world. In a café in Webertown, the
capital of Zysmania, a relatively poor developing country, you meet a senior
policy advisor to the Zysmanian government.
You start chatting and the advisor learns that you took the “Governance
of the E-conomy” class while at Cal, and asks you for some advice on how a
developing country like hers might benefit from the Internet and digital
technologies. What can you tell her
about developing countries' ability to leapfrog into the information age? Are the Internet and digital technologies
the Holy Grail that developing countries have been waiting for to close the gap
with the North? What local obstacles
may have to be overcome to take advantage of the opportunities provided by the
“E-conomy”? Whose model should a
developing country follow, if any? In
developing your answer, make sure to consider how advisable and feasible it is
for countries to try to copy one another in the first place.
Section 3: 30 Minutes (20%)
The following questions are
more speculative and address the political, social, and economic implications
of the widespread diffusion of digital communications networks and the possible
responses to the fundamental problems the raise.
Choose ONE of the following
questions:
1)
Will
the E-conomy reduce or exasperate inequality?
Does the answer differ if you consider inequality within as
opposed to between states? What
could be done to bridge the “digital divide,” within countries as well as
between them? Could there be a tradeoff
between reducing domestic and international equality? Why or why not? If so,
how should this tradeoff be resolved?
2)
The
development of complex open source software such as Linux is an early example
of the tremendous power of distributed innovation made possible by the
Internet. Can the “open source model”
of innovation be applied to other productive processes as well? Where else might it be implemented and what
are some obstacles that may have to be overcome for it to succeed? Or is open source limited to software
development? Why?
3)
Which
idea that you have encountered in the context of this course has most
fundamentally changed your perspective on the development of the E-conomy? How has it altered your understanding of
political economic development and democratic politics?