Technology in the Age of Globalization - Example

Portfolio Name: Roll No: Class: Teacher: Subject: February 06, 2008 University: Technology in the Age of Globalization Introduction Global economy is being transformed for the last three decades and served many purposes including advancement of economies around the world aimed at the welfare of common person. Latest developments in technology have supported the cause of this rapid transformation of world economy and the process of globalization. For most of the countries around the world, issues of national technology policy are in fact inseparable from transfer of technology, governance and management. As for the management of innovations in technology to support the process of advancements in globalization and sustaining them in the long term, particular mechanisms are essential to satisfy different needs of every stakeholders. Several elements are essential for an autonomous approach to innovation management and technology transfer that take into account maintainability and environmental quality. Not only the support of technology is necessary in the process of globalization but the transfer of paradigms of autonomous management of innovation for achieving real sustainable development is also required. The development of European science and technology partnerships with different developing countries is compulsory and the meticulous implementation of such partnerships is supportive for the process of globalization. (Burnside, C. 2001) Globalization and technology go side-by-side as globalization tends to unleash technology that in response drives organizations to plan sales and production on a global basis. Technology not only alters the working requirements but the jobs that are created by it require more training and education. It also alters the method of undertaking business operations by transforming associations among producers, suppliers, retailers and customers. (Joseph S. 2000) Survival is in fact the new worldwide business market call for increased competition and productivity. Those organizations that have improved their products through using technology delicately and hunted niche markets have prospered and survived. Globalization with the support of technology presents opportunities and challenges. Since the commencement of industrial revolution back in the eighteenth century, newly introduced technology meant transferring professions from one segment to another, for instance from agriculture sector to the farming tools, as well as creating eventually more jobs in society. (Bordo, M. 2002) Firms that make better usage of technology are more successful in creating most jobs. The increased and intensive use of technology results in more jobs creation in the long-run. Although many jobs created with the support of technology are normally not approachable to the persons who have been transferred, it is pertinent to mention that creation of jobs by firms that make better usage of technology is not restrained to only technical or scientific jobs. The service sector is the largest creator of jobs and many jobs that have been created in this particular sector do not require high-quality technical skills. Developing manufacturing firms in high-tech segments also require workers in finance, clerical, warehousing/shipping, marketing and sales fields. For manufacturing firms, the swift approach to massive quantity of information has bestowed strength to enhance quantity and quality of products for receiving orders from around the globe and reply as quick as same day, using billing systems that communicate and coordinate orders and help to invoice for multi-branched global firms. research and development firms also can benefit from the contribution of technology to the process of globalization as they can receive data from different sources even prior to its publication and making such critical information available instantly. (Burnside, C. 2001) Escalating high technology has a momentous impact on all industries without discrimination. The altering nature of work is obvious in the automation modifications in the processes of manufacturing, design and quality control not only in offices but in transportation, health care, communications and retail services. Businesspersons are discovering that the new fabrication substance and processes that are computer-based are increasing the involvedness of their trades. For instance machinists now require computer training for effectively using computerized numeric control tools in manufacturing. (Joseph S. 2000) Conclusion With the advancements of technology, faster, better, new and innovative services and goods are not only widely available but are in demand. To meet the increasing innovative consumer demand, there is other change in labor market towards trained workers capable of providing those goods and services. Governments around the world are recognizing swiftly that the globalization process have paved the way for new patterns of technological changes in which knowledge is created, applied and diffused. Most of the nations appreciate that; for the purpose of optimizing contribution of technology to globalization aiming at sustainable development it is essential to improve the usage of present international and national instruments, assisting mechanisms and ultimately promoting the mutually advantageous collaboration among civil society, governments, industry and business. (Claessens. 2001) Global Industrial Trade Introduction As the world has entered twenty first century, the emergence of new world order is being witnesses that although is global but not coordinated. This new order places most of the people around the world to remain in contact with each other but simultaneously initiates certain constraints particularly for developing countries that participate in the global industrial trade. The new global order focus on global activities in particular regions, countries and cities increasing the standards of fierce competition among firms particularly operating in the developing countries, presenting more challenges for them. (Joseph S. 2000) The world has recently seen swift growth of the global economy. This development has been driven partly by even swift rise particularly in industrial trade. The growth in trade is in fact the outcome of concerted efforts and technological developments to diminish trade barriers. Developing countries mostly have opened their economies to reap full benefits of the opportunities required for economic growth through industrial trade, although some of them are still reluctant. The outstanding trade barriers in the industrial nations are concentrated mostly in labor intensive producers and agricultural products in which a comparative advantage exists in favor of developing countries. Moreover, trade liberalization in such areas specifically; by developing and industrial countries would support the poorest diverge from poverty while providing advantages to the industrial nations themselves. (Bordo, M. 2002) Although some of the developing countries have experienced significant growth through global industrial trade the development has been less swift for many developing nations particularly in Middle East and Africa. The poorest nations have experienced their world trade share decline considerably and without lowering trade barriers they risk additional marginalization. About seventy five transition and developing economies fit this narration. The reasons for such marginalization are compound, including profound structural complexities, weak policy structure and institutions and safety not only at home but at abroad. Developing countries are not able to afford the large embedded subsidies, frequently channeled to slender privileged interests provided by trade protection. Furthermore, the increased development resulting from much free trade itself seems to increase the levels of incomes of poor in approximately the same ratio as those of whole population. Most of the developing countries have high tariffs that present problems in the global industrial trade. On an average the tariffs imposed on industrial products imported by many developing countries are almost three to four times higher than industrial nations. They reveal the same features of tariff escalation and peaks. Tariffs applicable on agriculture are higher than industrial products. (Claessens. 2001) Nontraditional measures to hinder trade are harder to assess and quantify, but they are becoming more important as conventional tariff protection and barriers like import quotas had almost been eliminated. Antidumping methods are being adopted more in developing countries and are faced unreasonably by the developing countries. Regulations that need imports to conform to sanitary and technical standards is also another restraint encountered by the developing countries. They inflict costs on exporters that can surpass the benefits to consumers. Preferential access schemes for most of the developing countries have not been effective at increasing access to market. These schemes often provide or exclude less generous advantages for, they highly safeguarded products of most benefits to exporters in the developing countries. They are mostly complex, nontransparent conditions that restrict advantages or terminate them once important market access is accomplished. Low market access is another constrained being encountered by the developing countries. A better access could provide them with the ways to harness trade for growth and poverty reduction. The developing countries should be offered quota and duty free access to the global markets that could benefit developing countries at a low cost to other countries, although recent steps undertaken by the European Union and other countries are significant step in this regard. The developing countries are not confident to persist with complicated national reforms and assure effective usage of aid flows and debt relief, being another restrained encountered by them in global industrial trade. (Martin F. 2003) Conclusion A much broad based bilateral negotiations among developing countries and industrialized nations is necessary to provide an opportunity for developing nations to reap visible benefits for exporters from opening of markets by others. This prospect can effectively provide an additional incentive for developing countries to open their markets and confront the restraints of industrial global trade. Some of the trade negotiations have failed to achieve the desired results, for instance the failure to commence a new round of bilateral trade negotiations at the World Trade Organization conference in Seattle in the year 1999 proved to be a major obstruction in removing and encountering restraints faced by the developing countries in participating global industrial trade. Global Trade in Services Introduction Services ranging from banking to health have become the largest sector in most of the economies worldwide. Services on one hand provide bulk of income and employment in many countries and serve as a significant input on the other hand like telecommunications for the purpose of producing products including goods and services. As such an effective services sector is essential for the entire economy and due to this phenomenon agreement on opening up particular services markets is vital to reap benefits particularly by the developing countries. The opening up of market can benefits all economies including developing countries as long as it is accomplished in a carefully considered manner. Although opening these services markets is specifically complex challenge as any arguments of services trade has to include the sharp question of whether persons providing services like lawyers, computer maintenance engineers or nurses can move to another nation to do so. Services shares in the global economy has extended markedly in present years and services now comprise almost seventy percent of production in OCED countries with high-income. Services are also being considered significant in developing countries with low and middle incomes, at the cost of manufacturing and agriculture. An increase of trade in services can provide benefits not only for developed nations but for developing also. Certainly, developing countries normally stand to make important gains, in spite of perception in most of the developing countries that they will ultimately lose out due to their local services sector being are non-competitive and inefficient. (Martin F. 2003) For every economy including developing countries, the gains from open services in trade are more than those achieved from liberalizing goods trade. Many reasons can be quoted to support this argument. Levels of safety in services trade are more and services forms a major share of the economy. Moreover services like transport and telecommunications are significant for delivering and producing all goods more effectively as such services markets can impact majorly on overall performance of economy. Manufacturing and agriculture would reap benefits from enhanced efficiency of supply, for instance, and this can probably ease any stress these sectors may confront as an outcome of their market opening. The provisional movement of persons to other countries for the purpose of delivering or providing a service is a prime factor of enhanced open services markets for developing countries. This area, if opened up more, could offer noteworthy economic gains at global level. Supply of service abroad can support a developing country in decreasing stress of labor markets and on the other hand can become a cause of improving capital flows that can help in building human capital. Foreign remittances can be a significant source of revenue. Currently introduced internet technology is also proving supportive for delivering a broader range of services through electronic means. It has in fact created a global market for worldwide sourcing of services that range from isolated call centers to refined software development. Developing countries from Caribbean to Asia have been able to capture their growing share meaning a saving in costs up to almost fifty percent in the long-run for firms, through the courtesy of highly skilled and low cost labor and significant improvements in telecommunications. (Martin F. 2003) Although industrialized nations continue to dominate investment in services and global trade but the present OECD work reveals that developing countries are also becoming successful and specialized in different sectors. For instance in audiovisual services the global market is a main source of earning for the film industry of India. In the area of port services many developing countries mark in world’s top twenty container terminals with Chinese Taipei, Korea, Hong Kong (China) and Singapore in top five. In construction services fifty one of the world’s top one hundred and fifty organizations in 2004, as per revenue generation away from their domestic market, were from developing nations including Turkey, Brazil, South Korea and Egypt and China. (Crockett. A. 2000) Conclusion To exploit the opportunities due to major changes that are taking place in the global services trade, developing countries need to take complete advantage of international sourcing in any area. Developing countries will require a highly skilled workforce, effective system of telecommunication and a better access to the markets of developed countries along with other areas to enjoy benefits offered by increasing global trade in services. Financial Globalization Introduction The current wave of globalization has in fact generated a passionate discussion among economists, captivating both opponents and supporters. As such we attempt to present a balanced version of financial globalization discussing its positive and negative impact on developing countries. (Martin F. 2003) Financial globalization can be termed as an integration of country’s domestic financial system with global financial institutions and markets. This integration classically necessitates that governments particularly of developing countries should liberalize the national financial sector and their capital account. Integration happens when autonomous economies record an increase in the capital movement across the country, including an energetic participation of domestic lenders and borrowers in international markets along with a wider usage of international financial intermediaries. Although developed countries are the most active contributors in the process of globalization, developing countries, mostly with middle-income groups have also commenced to participate. Financial globalization as per historical perspective is not a new experience, but the breadth and depth of globalization presently are unprecedented. Capital flows are present for a long time. (Martin F. 2003) The extent of capital flows and capital mobility a century earlier, according to some measures, is comparable to today. Capital flows seem to follow migration and were normally directed towards helping trade flows. Mostly capital flows took the shape of bonds and were of long-term nature. Few freestanding firms dominated international investment and financial intermediation was primarily concentrated in some family groups. Gold standard dominated the international system, in which gold supported national currencies. Today in spite of the perception that financial globalization is increasing the international financial system is yet to achieve perfect integration. There is a proof of constant capital market segmentation, biasness of home country and correlation among investment and domestic savings. The current deregulation of most of the financial systems around the world, the technological advances experienced in financial services and the increased variety in the channels related to financial globalization make revisiting past more expensive, specifically for partly integrated economies, even though the probability of a turn around still exists. (Crockett. A. 2000) The probable benefits resulting from financial globalization will possibly lead to increased financially interconnected and integrated world with deeper level of coordination and integration of international financial markets with developing countries. The prime benefit for developing countries from financial globalization is the growth of their financial system that involves deeper, complete, more stable and improved financial markets. There are two main sources through which financial development is promoted by financial globalization. First is that the financial globalization entails that a new kind of capital and in abundance is accessible to developing countries. Along with other factors, availability of more and new capital facilitates countries to a smooth consumption, expands financial markets and increases the levels of market discipline. Second, better financial infrastructure is led by financial globalization that in turn alleviates information asymmetries reducing complexities like moral hazard and adverse selection. Financial globalization has some negative influences on developing countries also. These negative influences possibly appear in short term at the time when developing countries are opening up. One of the major negative influence is that globalization can be associated to financial crisis such as crisis in Russia and Asia in 1997-98, Ecuador in 2000, Argentina and Turkey in 2001, Uruguay in 2002 and Brazil in 1999. These examples attracted worldwide interest. (Martin F. 2003) There exist various connections among crises and globalization. If the correct infrastructure in not put in place in the phase of integration, the process of liberalization pursued by capital inflows can incapacitate the health of domestic financial system. Another negative influence of financial globalization on developing countries is that in case market elements decline, speculative assaults will happen with capital outflows from foreign and domestic investors. Moreover, imperfections of international markets such as panics, boom-bust cycles, herding and the unpredictable nature of capital flows can result in contagion and crises, even in countries based on sound economic fundamentals. Conclusion The arguments that allege that market imperfections are due to crisis at the time when nations integrate with financial markets entails that imperfections exist more in international markets rather than domestic markets. Developed countries are most active participators in globalization process as compared with developing countries. Financial integration is in fact an incorporation of country’s local financial system with global financial markets and institutions that have positive as well as negative influences on the developing countries. Financial Instability Introduction Some of the researchers have examined deregulation, financial crisis, liberalization and globalization as a process that tends to establish great fragility and instability in their developing markets economies. For almost three decades, economic policies of the nations have been dominated by altering model that can be explained as integrated and open market without rules. According to these researchers the financial liberalization process is not successful as promised by the mainstream. Technological and innovation alteration in financial services have motivated integration of financial markets in globalized context. Ever since the Bretton Woods international agreements had breakdown, interest and exchange rate instability on the main financial markets has been directed towards genuine structural alterations in those markets, even though there is yet no indication of any new financial configurations capable of presenting the constant long-run financing essential for widening production capacities. Till then, financial markets are sunk in developing competence among the framework of financial liberalization and deregulation without revealing significant efficiency in financing such activity that is productive, or in the support larger economic development rates. Independent financial markets have been uneven, financial fragility has been transformed into frequent bank and financial crises in more than one hundred and thirty countries. (Martin F. 2003) The depresses markets, now called liberalized markets have not resulted in increased savings or growth and investment, neither to decrease of real interest rates, for the developing as well as largest economies. Globalization has contributed in many ways to increased financial fragility. Exponential increase of liquidity has been held mostly by private hands. Financial assets have grown at an accelerated rate globally that has led to doubling and tripling the yearly rhythm of trading and production worldwide. (Crockett. A. 2000) The time schedules set for financial instruments and deposits have shortened, accompanied by the growth of secondary market in securities. It has led to shape distinctions among different concepts and approaches of money supply that has been less evident from other financial intermediaries’ liabilities. Bank funds have also transformed into liabilities thereby yielding return and also originating primarily in money markets; there has been a considerable development in securitization of credit, along with a massive increase in off-balance sheet activities of banks, specifically involving usage of different derivatives and their management of securities. The dividing lines among investment banks and deposit banks have disappeared gradually and at the same time activity on capital and money markets has increased significantly, whereas credit activity has significantly decreased in different markets. Activities of investment funds have increased, with financial assets concentrated mostly in the hands of very few managers who transfer large amount of assets in short-run, destabilizing economies and currencies. The size and volume of financial transactions have developed speedily; the increasing volume of off-balance sheet activities have squeezed the connections among financial intermediaries, few of whom govern the markets and a prominent trend has occurred for building up of real financial mammoth-consortia. Complexities of financial supervision have also grown significantly; at the same time intervention by financial controllers and risk-level estimation are becoming more complex despite the support of different international funding agencies like International Monetary Fund, Bank for International Settlements and World Bank etc. (Martin F. 2003) Government debts are becoming one of the most significant bases for the growth in monetary assets. The interest rates being offered by these particular instruments are the prime means that are used to pursue capital flows and exchange rates to finance their deficit position. Generally public budgets have assisted every type of financial assets compensation, and of numerous intermediaries, restricting the capacity to steady public expense. Financial liberalization and deregulation in different domestic financial systems commenced as a consequence of the requirement for enhancing intermediation commissions and margins of national banks. Financial innovation along with developing presence of institutional investors and intermediation are closely connected with procedures of marketability of the firms, to the additional securitization of private debt and privatizations with particular financial purposes. Conclusion In this essay we have discussed the ways in which the globalization has contributed to increased financial fragility. The concept of globalization and financial crisis have been followed by main transformation among financial markets during last two or three decades. We have also discussed and debated the deregulation, globalization and liberalization as a particular process that has ultimately created a huge volatility and fragility in most of the developing market economies. References Burnside, C. 2001. Prospective deficits and the Asian currency crisis. Journal of Political Economy 109 (December): 1155-97. Bordo, M. 2002. Crises now and then: what lessons from the last era of financial globalization: NBER Working Paper 8716 Claessens. 2001. Corporate risk around the world. In Financial crises in emerging markets. Cambridge University Press. Crockett. A. 2000. How should financial market regulators respond to the new challenges of global economic integration? Opportunities and challenges, 121-28, proceedings of a symposium sponsored by the Federal Reserve Bank of Kansas City. Joseph S. 2000. Globalization of the economy. In the governance in a globalizing world. Brookings Institution Press. Martin F. 2003. Financial policies and the prevention of financial crises in emerging market countries. in economic and financial crises in emerging market countries. University of Chicago Press. Read More