Impact of technology on globalisation
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Technological advancements are a major driver of globalization. Technology allows companies to compete globally with less capital investment and travel through knowledge sharing and internet connectivity. There are two modes of advancing technology - innovation of new technologies and adoption of technologies from elsewhere. While adoption enhances living standards, innovation is important for long term growth. Technological changes reduce communication and transportation costs, facilitating global trade networks. Information technology in particular has reduced barriers through tools like the World Wide Web. 80% of globalization is estimated to be technology driven, impacting areas like outsourcing and cultural spread through inventions. Technology transfer aims to increase productivity, encourage foreign investment, and support economic development. However, introducing new technologies takes time and late adoption can limit
Impact of technology on globalisation
- 2. Technology on Globalization • In the period of knowledge development, technological innovation is visualized as the prime driver to create and maintain competitive advantage. Interest in technology development and business innovation increased as concern mounted over the economic power of the nation and over competition from abroad. • Globally competitive companies use broad knowledge base, a global human network, and Internet technology to flourish against international competition (regionally, nationally, or internationally) without the use of significant capital investment, travel or even an international presence.
- 3. Technology Development There are two basic modes of advancing technology: 1. One is innovation (developing one's own new technologies) and 2. The other is adoption (introducing technologies that have been devised elsewhere). Adoption of technology from oversees enhances living standards substantially, and even to achieve long term growth based on the continuing technological innovations achieved abroad. But technology adoption has its limitations as well. Technological progression in global business can lead to economic growth because they contribute to the manufacture of new goods, new services, creating new jobs, and new capital.
- 4. Technological advancements: Technological advancements reduce costs of transportation and communication across nations and thereby facilitate global sourcing of raw materials and other inputs. Patented technology encourages globalization as the firm owning the patent can exploit foreign markets without much competition. Information technology has led to the emergence of the global village. For example, the World Wide Web has reduced the barriers of time and place in business dealings. Buyers and sellers can now make transactions at any time and any part of the globe. Technological change also affects investments.
- 5. Impact of Technology: •Friedman pointed out that 80% of globalization is technology driven. •Now technology is easily transferable to developing countries where high tech production can be combined with low wages. •A large number of firms in advanced countries are now outsourcing labour intensive services from developing countries like India. •Technology has also impacted the cultural globalization with inventions like telephone and television. •Telephone has made it feasible for anyone to talk to each other regardless of where they are geographically in the world. •The spread of information technology has made production networks cheaper and easier.
- 6. Technology Transfer: To increase Productivity. To encourage FDI's. To increase the living standards. To maintain the balance of trade between import and export of an country. To gain macroeconomic stability. For the economic development of the country.
- 7. Time Lags in Technology Introduction: In India the TV arrived very late. Although the color TV had become quite common in advanced countries. Even when the TV arrived and the telecast started, initially there was only black and white telecast. Even the cable TV came to India only by about the beginning of 1990s. The late introduction and slow expansion (even today) affected not only TV business but also the advertising industry and product promotion. The time lags in introduction of technologies may even result in some products not being able to reap the market. Another e.g., the electronic typewriter had become known to Indians before it could penetrate the market. It could not achieve the growth because of the advent of the computer.
- 8. Status of Technology in India: Information Technology in India is an industry consisting of two major components: IT services and business process outsourcing (BPO). The sector has increased its contribution to India's GDP from 1.2% in 1998 to 7.7% in 2017. The IT-BPM sector in India stood at US$177 billion in 2019 witnessing a growth of 6.1 per cent year-on-year and is estimated that the size of the industry will grow to US$ 350 billion by 2025. In the recent years, rising income inequality and jobless growth have been subjects of discussion and debate. A February 2018 New World Wealth report claimed that India is the second-most ‘unequal’ country in the world, with millionaires controlling 54% of the wealth. In Japan, the most equal country, millionaires control only 22% of national wealth. A closer look suggests that in India, gross fixed capital formation is falling. Growth in capital formation has fallen from a high of 17.5% during 2004-2008 to a lowly 4.3% during 2014-2016.
- 9. Technology Management: Technology strategy (a logic or role of technology in organization), Technology forecasting (identification of possible relevant technologies for the organization, possibly through technology scouting), Technology roadmap (mapping technologies to business and market needs), and Technology project portfolio (a set of projects under development) and technology portfolio (a set of technologies in use).