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Technological Change
For Economic Development

By Khilendra Basnyat

THE world's economy is characterised by a slow growth rate with high rates of inflation and unemployment. In addition, imbalance in international payment, prolonged monetary instability, intensified projec-tionist pressure, structural problems and maladjustment are the world's economic features.

Shortage

Problems are also stemming from the shortage of critical nonrenewable resources, disruption as well as dislocation in the functioning of the international trading and financial systems. Since international trade has lost its former dynamism, there are uncertain long-term growth prospects for the world economy.

The persistence of the above-mentioned state of affairs in the world's economy has asymmetrical impact. Due to vulnerability of their economies most developing countries have been hit the hardest. The stresses and strains on their economies are assuming alarming as well as critical proportion.
These countries are facing deterioration in their terms of trade, increasing limitation deterioration at their export to industrial countries, inadequate transfer of real resources to these countries and imbalance in external payments. Therefore, they are facing the growing burden of external indebtedness. These problems can be mitigated to some extent through technological changes. Technological change always plays a significant role in the economic development of a nation. For example, the industrial revolution and advances in transportation and communication converted Great Britain into a global super power.

The industrial revolution represented a revolutionary improvement in production process through the application of technology. Such technology is of newly invented types of machines. This is an improvement that brought about a change in the pattern and structure of the English Society.
The overall effect of all this was an accumulation of wealth by way of profit to the English bourgeoisie. It was a dynamic wealth, which by way of further investments brought about further profit. The revolution in technology in the form of means of transportation and communication removed most national barriers in the indefinite amassing of this wealth.

In the nineteenth century, industrial capacity provided the resources that enabled Britain and later German to gain dominance. In the twentieth century, science, especially nuclear physics and space technology gained prominence for the currency of power in the United States and the erstwhile USSR. In assessing power in the information age, the importance of technology has risen. However that of geography, population and raw materials has fallen. The information revolution is making available new tools for promoting market reforms and democratic institutions. Nowadays, information technology has been utilised to promote business and market development.

Although e-commerce did not exist before 1995, it constitutes a 6 billion business that is expected to explode to $ 1 trillion by 2003. This is about 400 per cent increase in volume. Likewise, Asia is expected to net e-commerce sales of about $ 32 billion by 2003. No doubt, the globalisation of financial markets has an unfair impact on the e-business. However, private currency traders trade $ 1.3 billion a day, more than the total foreign currency of all nations put together.

International portfolio transactions by the US investors increased from nine per cent of GDP in 1980 to 135 per cent GDP in 1993. Actually, technological change was responsible for much of the economic growth in the United States between 1909 and 1949. Economists prefer to look at Total Factor Productivity (TFP) which was usually thought to measures the technological progress in order to find out a nation's economic growth.

In 1952, Japan had a per capita GNP of US $ 188 in the prices of the day. At that time, it was below that of Brazil, Malaysia and Chile. Today, it has the fourth largest GNP per capita in the world.
Much of the growth in labour productivity was driven by TFP growth. Actually, technological progress, the highly educated and skilled workforce in manufacturing and the ability to initiate technology from abroad helped Japan catch up with the United States.

Newly industrialised countries (NICs) comprising Singapore, South Korea, and Hong Kong have increased their economies considerably. It is because these countries have been successful exporters and have also imported foreign technologies. High savings as well as investment rates, low taxes, high quality education systems and institutions are the other reasons behind this success.
NICs have attracted huge amounts of Foreign Direct Investment (FDI) which have enabled them to adopt and adapt foreign technologies. Generally, the ability of developing countries to attract FDI seems to rely on whether they adopt export promoting or import substituting strategies for development. Some economists are of the opinion that export-promoting countries attract more FDI, which yields social return.

In fact, East Asia still remains an attractive and appropriate place to carry out business with forward looking and innovative companies apart from well-educated and productive managers. Basically, it is the productivity of those workers and companies that will assess their future rather than corruption crises and bank failures.

While it is essential to do away with restrictions on industries, commerce and finance, it is not necessary to do away with regulations. Also, instant information makes markets work better. If the financial and economic conditions are healthy, markets that disappears overnight can also recover overnight. This will cause little or no damage to trade and investment flows. In recent years, many countries are no more using military force in order to achieve control over rivals. Rather neo-colonialism and war by other means (WBOM) are the new methods of achieving security in the world.

Actually, the digital minds-set converts knowledge and ideas into products. Hence, an organisation's ability to commercialise ideas speedily by saving time and resources increases knowledge share. This ultimately translates into an increased market share. Nations have significant role to play in implementing new monitoring and regulatory practices, especially at a time when the world is shifting to e-commerce and the Internet is being used for the transfer of huge capital.

As the continued rapid growth of global trade on goods and services depends on financial flows, the instant availability of information has a telling effect. No doubt, the use of information technology can lead to multifold profits for a country. However, such information, if not regulated can cause economic crises.

Two Players

The two main players in the world's economy are the governments and companies. Therefore, they have to be aware of the technological change in the information age and develop a digital mindset to deal with realities and to bring about economic development.

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