Future IT Trends of Indonesia - Case Study Example

Running Head: Future IT Trends of Indonesia Future IT Trends of Indonesia and its Implication on the Countrys Economic Growth [Institute’s Name] Future IT Trends of Indonesia and its Implications on the Countrys Economic Growth Introduction There is no disagreement on the fact that the advent of information technology has brought one of the biggest revolutions in the history of this planet. It just took these past few decades for information technology to change the world entirely. Information technology and the growth in this field has misrepresented the world to such an extent that if out ancestors get the opportunity to visit this planet today they would definitely claim that they are on the wrong planet. In its broadest sense, Information Technology refers to” the hardware and software related to electronic computer used for securely storing, retrieving, manipulating, processing, transmitting, converting and protecting information” (Jorgenson, Ho, Stiroh, 2005) (OECD, 1999) (Rowen, 1998) (Tan, Corbett, & Wong, 1999). Without any doubts, information technology is surrounding us from all possible directions and the human of today is dependent on computers more than anything possible. From emails to voice chats, from web cams to video conferencing, from mainframes to laptops, from weather updates to political news, from Google earth to music downloads, from CDs to DVDs, from e-business to e-commerce, from you tube to Google, in some way or the other Information Technology is dominating and controlling our lives (Rowen, 1998). . IBM was very true in predicting it when they said that we would be witnessing an altogether different mode of economy that would be a “digital economy” (Tan, Corbett, & Wong, 1999). In addition, it is impossible to deny that IBM also hit the bull’s eye in predicting that Information technology would become the biggest global medium of social, business, economic and corporate revolution in the 21st century (Masuyama, Vandenbrink, & Kenkyūjo, 2003). Children of today can even manage to live without their parents for days; however, they cannot even imagine for a single second, their lives without computers and related technologies, even for a single day. In fact, the generation of today would consider the end of Information Technology or distance from it as the end of this world or the real doomsday (Chia et al, 2002). Moreover, the world accepts and praises the development, benefits and advancements that this technology has brought in every possible known field. Medicine, business, health, infrastructure, education, economics, banking, finance, management, arts, music, agriculture, risk management are just few to mention (Jorgenson, Ho, & Stiroh, 2005). More importantly, it just took computers almost five decades to capture the scene all over the globe. Very few technologies have spread so fast and grown at such a quick exponential rate in the human account of written history. Much has been said about the exceptional intensification of Information technology and its effects in the past. However, this paper mainly focuses on the upcoming trends of information technology on this overall planet, then narrowed down to Asia only and then this paper would only be viewing it this topic with the lens and concern of Indonesian perspective and its future trends and implications on Indonesian economy. Global Trends in Information Technology Experts agree that this field has been growing exponentially since its advent. However, another side of the picture shows that in the coming few years this field would face a bit of limitations due to some other external elements. Yet authorities hold the vision that the affect on the intensification would be at its minimum and still we will witness some considerable amount of development (Masuyama, Vandenbrink, & Kenkyūjo, 2003). Diverting our attention towards the global future trends, professionals and global observers have made many predictions with their precise observations and calculations. Without any doubts, the lifestyle of people all over the world would continue to move towards a sophisticated “information age lifestyle” (Masuyama, Vandenbrink, & Kenkyujo, 2003). Information technology would continue to bring people even more closely from different sides of globe. To this date, only intangible information and data can be sent through mails, telephones, wirelesses and faxes. However, we can expect eventually in the future that tangible items could also be sent in the same way with speed of light (Pohjola, & World Institute for Development Economics Research, 2001). Moreover, if that happens then the next target would be e-mail or fax humans and that would mark the start of a new magnificent chapter of the human history (Chia et al, 2002). Future Trends of Information technology in Asian Continent Despite the fact that the impact of information technology on Indonesian economy would be discussed in contrast of the completely East Asian side yet a small introduction is given here. Asia has always dominated the manufacturing sector over the years. That has been the reason why it has been the focus and centre of attention for the British people to capture and control (Guile, Quinn, & National Academy of Engineering, 1988). All the expansion and growth that the Asian economies have witnessed has been due to two prime reasons related to information technology. The first has been the increase in the Foreign Direct Investment (FDI) due to the production of computer related items on low cost and efficient manner. The second has been the diversion o employment from the traditional agriculture and manufacturing to the services sector since the services sector had now a new branch of information technology related experts (Dhanani, Islam, & Chowdhury, 2009). Information Technology in Indonesia and its impact on country’s Economic Development It was with the very start of the 21st century that all the economies felt three gigantic changes happening regarding the global economy. Firstly, information technology has contributed immensely in not only brining people but also countries and industries together as well therefore; corporate activities are now as result turning into activity that is more global and international and in turn cross-border investments are increasing (OECD, 1999). Secondly, all the tariff barriers are lessening under the influence of World Trade Organization. Lastly, now countries are no longer operating under isolation, this is the reason why, now policies and happenings in one country are affecting the conditions, approaches, and situations of economies all around the globe (International Monetary Fund, 2001). In this kind of situation, even a nonprofessional can figure it that information technology plays a vital role, even more important than capital and labor do. Indonesia being the fourth most populous country in the world, a member of G-20 nations, the largest economy of Southeast Asia and exporting more than 14% of this exports to the United States, Indonesia recognized and felt the importance of information technology long ago. Indonesian authorities were smart in picking up this that patterns of employment, investment and production are changing due to the inclination towards information technology and the advent of “information age” (Masuyama, Vandenbrink, & Kenkyūjo, 2003).One of the most evident changes that happened was the increase in Indonesia’s GDP through increase in the contribution of services sector in the country’s GDP. Currently, the services sector contribution has grown to around 48 percent from the 35 percent contribution in the previous decade (Dhanani, Islam, & Chowdhury, 2009). It is expected that this contribution in this sector would increase gradually and slowly but surely. This is because as information technology is dominating the scene more strongly more and more knowledge experts are required. The demand for these professionals is increasing all over the world. Not only new industries have gown related to information technology but also it has created more opportunities in the services industry under the umbrellas of existing firms like banking and finance by modernizing it. Over the years, the investment in fields of information and communications has increased and the government seems to be more interested in it (OECD, 2005). In addition, one way in which the advent of information technology has severely affected the world has been the reduction in employment rate in the manufacturing and production sector where machines are now dominating the picture. Figures are proving this point. The contribution of the manufacturing sector to the GDP was more than 11 percent in the year 1987 and it has decreased drastically to 4.7 percent according to the figures of the last year (United Nations, 2009). Since the GDP of this sector has decreased, it becomes easy to predict that the employment rate would have decreased as well. Now it is also evident that this decrease in the employment level is a result of increased employment and demand of the services sector in the fields of telecommunications and information technology (United Nations, 2009). In addition, by shifting their attention towards information technology department has provided Indonesia with ways in which they have been minimizing their cost to become more and more efficient in all their other sectors (OECD, 2005). Honestly speaking, this has been the case with all the countries in the world but not to forget that since Indonesia is the biggest economy of Southeast Asia it has definitely done something special to keep ruling (Pohjola, & World Institute for Development Economics Research, 2001). Easy and online access to healthcare and educational facilities, new knowledge and ideas, new opportunities for growth has been the benefits of information technology that Indonesia economy has been smart to take from the beginning. Looking into the future is also one of mandates of this paper. No one questions or counters that most of the countries in the East Asia have shown some remarkable economic growth in the past thirty odd years despite the recession of 1997-98 (Pohjola, & World Institute for Development Economics Research, 2001). All the countries have seen the adoption of Information Technology to the most possible extent as the growth and prosperity formula. The same is the case with Indonesia. The growth of all countries from East Asia has been witnessing a growth ladder. On this ladder at the first stage is agricultural mining, at the second stage is labor intensive manufacturing, high tech manufacturing cab be placed at the third stage and banking telecom services at the last stage (Dhanani, Islam, & Chowdhury, 2009). Now a careful analysis allows us to classify different East Asian countries into these categories. Laos, Cambodia and Myanmar are still at the first stage of agricultural mining. Indonesia, Philippines, Thailand, Vietnam and China (Dhanani, Islam, & Chowdhury, 2009) appear to be at a stage where they appear to be as doing labor-intensive manufacturing. Malaysia, South Korea, Japan, and Taiwan (Dhanani, Islam, & Chowdhury, 2009) have advanced to the stage where they are busy in high tech manufacturing that are more technology orientated and less labor orientated. Only Singapore and Hong Kong have shown the tendency to reach the last stage. Important to note here that in 1950’s and 60’s Singapore was along with Indonesia in the first traditional group; however, over the years, it has advanced to the fourth group. It has only been possible due to the extra ordinary attention that the Singaporean economy has diverted towards information technology (Dhanani, Islam, & Chowdhury, 2009). It indicates that there is still a long way to go for the Indonesian economy to develop in the field of information technology and match the Singaporean level. As highlighted a number of times earlier in this paper as well that expansion of Indonesian economy with the help of information technology largely depends upon the dimension in which it is considered. Considering the manufacturing of hardware, including simple monitors, printers, memory chips and other computer related products; East Asian has been at the top of the list (OECD, 2005). Especially china dominates the production of these products due its low cost labor expertise. This has increased the percentage of foreign direct investment in these countries especially in china and Malaysia for their expertise (United Nations, 2009). Indonesia seems to be realizing this and government seems to be making some serious efforts in this regard as well (Dhanani, Islam, & Chowdhury, 2009). Moreover, Indonesia also can make efforts in making sophisticated IT related products and Japan has been the leader in this regard. When the topic is of Software industry, no Asian country seems to be taking the global lead however; it is the western side of the world that dominates (Lee, Khatri, & International Monetary Fund, 2003) (International Monetary Fund, 2001). However, recently some efforts appeared on the scene done by China and Singapore to capture these markets on big levels as well. Now Indonesia can try to establish its leadership in these grounds and news shows that it has done some serious efforts in this regard. In order to reap the fruits from information technology Indonesia will also have to make sure that this technology has influence on a micro level to change the microeconomics, which will in turn deeply affect the macro economy as well. Speaking sadly, recent statistics show that Indonesia only has 123 people per 1000 people who use computers. This figure for Japan touches 658, for Singapore, it is 845 and for Hong Kong, it reaches the level of 741 (United Nations, 2009). These figures are the highest in East Asia and are simply sensational. Indonesia can smell a course of action for them after looking at these figures. Another important issue that Indonesian government would have to tackle in order to see the effects on Indonesian economy would be to work hard on making sure that the education in the field of computers is wide spread. They should work on producing as many programmers and high engineers in order to capture the needs of tomorrow. Conclusively, the paper has discussed some of the significant aspects of future IT trends of Indonesia and endeavored to identify and analyze its implications on the country’s economic growth. It is an expectation that the paper will be beneficial for students, teachers, and professionals in better understanding of the topic. References Chia, Siow Yue, Lim, Jamus Jerome., & Institute of Southeast Asian Studies, Konrad-Adenauer-Stiftung. (2002). Information technology in Asia: new development paradigms. Institute of Southeast Asian Studies. Dhanani, Shafiq, Islam, Iyanatul & Chowdhury, Anis. (2009). Industry and Labor in Indonesia. Routledge. Guile, Bruce R., Quinn, James Brian., & National Academy of Engineering. (1988). Technology in services: policies for growth, trade, and employment. National Academies Press. International Monetary Fund. (2001). World Economic Outlook October 2001: The Information Technology Revolution. International Monetary Fund. Jorgenson, Dale Weldeau, Ho, Mun S., & Stiroh, Kevin J. (2005). Productivity: Information technology and the American growth resurgence. MIT Press. Lee, Il Houng, Khatri, Yougesh, & International Monetary Fund. Asia and Pacific Dept. (2003). Information technology and productivity growth in Asia. International Monetary Fund. Masuyama, Seiichi, Vandenbrink, Donna, & Kenkyujo, Nomura Sogo, & Institute of Southeast Asian Studies. (2003). Towards a knowledge-based economy: East Asias changing industrial geography. Institute of Southeast Asian Studies. OECD. (1999). Information technology and new growth opportunities. Organization for Economic Co-operation and Development. OECD. (2005). A new economy: the changing role of innovation and information technology in growth. OECD Publishing. Pohjola, Matti, & World Institute for Development Economics Research. (2001). Information technology, productivity, and economic growth: international evidence and implications for economic development. Oxford University Press. Rowen, Henry S. (1998). Behind East Asian growth: The political and social foundations of prosperity. Routledge. Tan, Felix B., Corbett, P. Scott., & Wong, Yuk-Yong. (1999). Information technology diffusion in the Asia Pacific: perspectives on policy, electronic commerce and education. Idea Group Inc (IGI). United Nations. (2009). Economic and Social Survey of Asia and the Pacific 2009. United Nations Publications. Read More