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Difficulty: MediumThe Digital Revolution and Economic Globalization

"By enabling instantaneous, low-cost transmission of information, the digital revolution has done for the service sector and intellectual work what the railroad and assembly line did for physical goods. Software coding, customer service, and financial analysis can now be performed anywhere in the world and transmitted back to corporate headquarters in the United States in seconds. This has allowed American multinational corporations to establish global divisions of labor, outsourcing routine cognitive tasks to lower-wage nations while keeping high-level management and design concentrated in U.S. metropolitan centers."

— Economic policy report, 1998

The developments described in the excerpt most directly contributed to which of the following economic trends in the United States during the late twentieth and early twenty-first centuries?

  1. The growth of a service-based economy accompanied by a decline in traditional manufacturing employmentAnswer
  2. B
    A resurgence of federal regulations and price controls over interstate commerce and communications
  3. C
    The migration of service-sector jobs from the Sun Belt to northern industrial cities
  4. D
    The expansion of direct federal job-guarantee programs modeled on New Deal relief initiatives

Answer

The growth of a service-based economy accompanied by a decline in traditional manufacturing employment
The correct answer is correct because the digital revolution and economic globalization enabled U.S. firms to outsource and offshore routine manufacturing and basic service jobs. This accelerated deindustrialization in traditional manufacturing sectors while stimulating the growth of a service-oriented economy centered on information, finance, and technology services.

Step-by-Step Solution

1
Identify the core message of the stimulus
The excerpt describes how the digital revolution allowed businesses to segment and outsource cognitive and service-sector tasks globally.
Understanding the technological changes described helps connect them to domestic economic outcomes.
2
Connect the technological capability to global corporate practices
Corporations used digital networks to offshore routine work, leading to deindustrialization and restructuring of the U.S. workforce.
This links global economic integration to structural changes within the domestic labor market.
3
Identify the primary macroeconomic shift in this period
The U.S. economy transitioned from an industrial manufacturing base to a post-industrial, service-oriented base.
Selecting the option that reflects this transition answers the question.

Key Concept

The Digital Revolution and Economic Globalization
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Topics

The Digital Revolution and Economic Globalization

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