Scott McNealy, Chairman and Chief Executive of Sun Microsystems, is usually worth listening to, and not just for the entertainment value.

An anecdote McNealy shared with a Canberra audience in a recent flying visit to Australia, for example, revealed a lot about the relative strengths of the US and Australian economies.

More specifically, it went some way to explaining how it is that the high tech investment mania that we were told was driving economic optimism in the US can come to a crashing halt since April, and yet the Australian dollar does not recover as a result.

Indeed, it is difficult to say which fall has been more brutal. The Nasdaq index has fallen from over 5000 points to hover around 3000, while the dollar has collapsed to record depths against the greenback of almost two for one.

But a story McNealy told illustrated that there is more to the strength of the US economy than is revealed in stock valuations.

McNealy told the audience about a conversation he had had with Jack Welsh, the Chairman and Chief Executive of General Electric whose corporate leadership has become the stuff of legend. McNealy, who is a member of GE's board, said he had told Welsh that GE should wire all its light bulbs to GE light bulb factories through the Internet, running over the AC power lines.

That way, McNealy said, the lights in remote buildings could tell the factory when they were about to blow, a light could be produced to replace them and be dispatched, along with a map to the location of the faulty product and an invoice. In one move, GE would have gone from a light products manufacturer to a lighting services company, and made it extremely difficult for rivals such as Phillips to steal its clients.

The story was more than a good yarn about the boundless opportunities created by the Internet. It also speaks volumes about why Australia is not perceived to be in the same league as the US in the New Economy stakes. The measure of a New Economy is not just how many dotcom companies are being created. It is about the degree to which the possibilities being opened up by Internet businesses and other information industry businesses are being adopted by the wider business community.

It is about how companies right across the economy must take advantage of the fresh opportunities and new thinking, and convert these to an international competitive advantage in numerous industries.

And, often, is about person to person networking and brainstorming that crosses industrial sectors.

It is why the US aerospace, automotive and entertainment industries are resurgent.

McNealy's story is a microcosm of that very phenomenon. Every time Welsh and McNealy swap ideas, the US economy benefits. When McNealy tells Welsh about the latest in information networking, there's a good chance that GE will investigate whether it should invest in that development within its own operations. And when Welsh tells McNealy about how he has structured his far flung empire, it goes to McNealy's evolving model for the internal management systems in Sun and helps keep Sun at the forefront of profitability in the information industries.

"Soft" external economic benefits such as these are far from a novel concept to Australian business analysts. The automotive companies made strong arguments about their influence in bringing leading edge management practices and quality control methodologies to the manufacturing sector at large during the two Industry Commission inquiries into manufacturing in the 1990s. What has happened since the mid 90s is that information technology has become so pervasive in elaborate transformed manufacturing industries that those information industries have become yardsticks of the modernisation of economies.

And this is where Australia has a couple of serious problems.

Firstly, many of our larger enterprises have struggled to overcome the notorious branch office mentality in their management suites. They wait for instructions from head office in Japan, the US or Britain to tell them how to change rather than seizing the initiative.

But even those senior managers who are fearless leaders in Australia do not have the luxury of having a Scott McNealy in the neighbourhood with whom to brainstorm.

Which brings us to the dilemma of the Australian dollar in the New Economy.

Short term fluctuations in the exchange rate are supposed to be self correcting mechanisms. The dollar falls, which means exports are cheaper, which means national income rises, which means the value of the currency eventually rises again.

But in the New Economy, Australia must export to Silicon Valley – not products, but people. Silicon Valley, the heart of the information industries machine, is not the source of information industries products, but the home of the best start-up companies and the entrepreneurs who have created them.

This approach of entrepreneurs learning in Silicon Valley how to develop start-up companies to a point where they are international enterprises is accepted by policy makers. What policy makers hope is that those entrepreneurs will keep part of their business at home, and eventually come home themselves to spread the wisdom they have gained, slowly making it less of a requirement for successive generations of entrepreneurs to leave home in the first place.

In effect, it is not products but people that are exported to Silicon Valley then imported back, bringing with them intellectual "value add" from the US to spread around at home. Some of it will go to other entrepreneurs and some of it will spill out into other industries in the form of exposure to the leading edge applications of information technology.

If Australia wants to follow that model, Australian start-up companies will probably need to receive their initial capital funding in Australia, and use that money to make the leap across the Pacific.

But this is where a decline in the value of the dollar becomes an impediment. In the past year, the dollar has lost about 15 per cent of its value against the greenback, which means the locally funded capital that Australian start-up companies have to finance themselves into the US market has been reduced by a similar amount.

In other words, the US dollar enjoys a virtuous cycle as the New Economy sucks in more fuel to feed itself from all over the world. But, the money markets have taken the view that Australia is in a vicious cycle, with a declining currency making it harder to overcome the very factors that lead to that loss of value in the first place.

Clearly, it is not an option to attempt to manipulate the exchange rate. But it might be an argument in favour of a Government program that would have been unthinkable only a few years ago – some form of direct encouragement for Australia's best and brightest to head overseas, albeit temporarily.