Technology and Economic Change - Assignment Example

Technology and Economic Change by Course: Tutor: University: Department: Date: Question 1 The case study conducted by OECD brings to light several significance of technology particularly in production, distribution, and education. According to the case study, technology is a critical driver of economic development and long-term growth. OECD identified one of the benefits of technology as the increase in productive capacity of resources as well as the possibility of developing innovative products and processes. A country that is not able to keep up with technological progression will ultimately lag behind in matters of economic development. Considering a country like Kenya, the national government is fast tracking a policy on laptops for all primary school kids. This is in recognition of the fact that technology will become a way of life in the near future. In the same education sector, several policy frameworks have realized this need and have structured their strategies in recognition of the critical role of new technologies. The long run effect is the holistic change in the way Kenyan economy operates. The Adelaide Declaration of 1999 appreciates that the future will be shaped by information communication technology. The declaration holds a view that students should be ready to use new technologies. In response to this preposition, the government has gone ahead to support education through technology while reducing barriers. Rwanda is already running a laptop project that has seen children learn though technology. Countries are therefore moving with speed to avert the possibility of being left behind. Economic agents are also reorganizing themselves to handle technological change. As a key element for economic development and long-term growth, introduction of new technology in a firm is capable of improving productivity. A case in support of OECD assertion about importance of technology in increasing productivity is Qantas Airline. It is in the interest of Qantas airline to improve constantly its technology in the same manner other firms in the industry are doing. Advancement in technology has been replicated in numerous facets of Qantas airline. Engineering department for example has shown dedication to development of technology with a goal of augmenting products, processes, and systems (Qantas 2012). The long run impact is improvement in efficiency and decline in costs brought about by inefficiencies. The airline industry is aware that focus on continuous improvement saves operational costs. As a technologically advanced company, Qantas offer other airline operators standardised engineering services. It is imperative to note that continuous change in technology presents a chance for airlines to become competitive. Currently many airlines compete for market niche hence a firm must shape the nature of in-flight entertainment systems and the seats. An example is United Airlines that features personalised and on-demand entertainment in long haul fleet. Focused on giving the best level of services, entertainment that has been built inflight includes movies, TV programs, music, games, and learning experiences (United Airline 2014). The other area of airlines that have capitalized on technology in order to deliver quality customer service is the ticketing section. Innovative software and the advent of mobile computing progressively raise efficiency in delivery of services. Bearing in mind that collaborative software technology and video conferencing have reduced the need to travel, airlines must step up their game in order to remain in the business. The fact that efficiency is replicated in other firms means that the economy is becoming more efficient in delivery of services, which contributes to long-term growth. The other critical economic area that supports OECD’s assertion about technology for economic growth and development is mobile money transfer system. Because of technology, it is now possible to move money electronically across the globe with just a press of a button. Starting with Mpesa, money can be transferred to different people in different parts of world. This has increased the ease of doing business. Web-enabled mobile phones have further been instrumental in creating a favourable environment for business. A person can just log in to an online account then transfer business money. The improved ease of doing business has positive impact on an economy. As a country with the fastest growing internet users, China is set to overtake United States. Exploration in information and communication technology has seen the country lead in exportation of technology. This has contributed to the fast pace of economic growth being witnessed in the country. Question 2 In a research by Taylo (2006), economic growth represents the increase in productive capacity of an economy. This is measured by looking at changes in value of output i.e. the gross domestic product. The production possibility frontier is instrumental in examining economic growth of a country. Figure 1: Economic growth The production possibility curve above illustrates potentials of an economy. A growth in the economy will be confirmed by an outwards shift in production possibility curve in the direction shown in figure 1. The figure also illustrates the relationship between investment and savings. Assuming that other variables are kept constant, higher investment will actualize greater economic growth in the future. However, greater investment will be achieved by cutting production of consumption goods in an economy that is operating at full employment. The outwards shift in production is caused by an increase in factors of production i.e. more labour, capital, and factor inputs. Improving efficiency also plays a critical role in shifting the production possibility curve outwards. Furthermore, introduction of new technology can have a positive effect in productivity of an economy and will result in outward shift in production possibility frontier consequently bringing about economic growth. One of the ways in which technology enhances economic growth is by cutting average cost of producing a product thus a product can be produced easily and cheaply. Secondly, technology paves way for the development of a new product. Availability of new products in the market motivates consumers to spend their earnings. An increase in demand propels an economy to growth. Question 3 The Australia Bureau of Statistics (2011) shows a rapid change in rate of employment per sector. In 1960s, Australia concentrated on primary industries including sheep, cattle, and wheat. The country later moved to manufacturing to avail equipment in the market. In 1966, Australia Bureau of Statistics shows that manufacturing accounted for 26% of employed labour compared with 21% in wholesale and retail sector. Australia Bureau of Statistics confirms that jobs in the manufacturing sector are currently declining such that the sector is only able to capture 8% of the employed labour in 2011. On the other hand, Health care and social assistance registered a higher percentage, 12% of the labour. Retail sector and construction sector employed 11% and 9% respectively of the labour. The statistics further showed that Agriculture and Mining accounted for 3% and 2% respectively of employed workforce. This clearly demonstrates a shift in employment with more people being absorbed into childcare industry. The changing trend in employment is demonstrated in the figure below. Figure 2: Employment in service industry rising In terms of profession, Australia Bureau of Statistics indicates a rise of professionals, 22%, clerical and administrative workers, 15%, and technicians 14%. This is illustrated in the figure 3 below where blue colour jobs are declining while white colour jobs are rising. Figure 3: Rising white colour jobs Similar observations are visible in United States. The U.S Bureau of Labour Statistics shows that occupations such as personal care aides, registered nurses, retail salesperson, and home health aides recorded the highest growth in employment. The rising demand in this sector is not attributable to lack of technological innovation in these areas but because of personalized care demanded. There has been an increase in diseases hence the rising demand for personal care aides. Question 4 Rural areas have generally registered a smaller decline in high-tech employment mainly because technology is not well developed in the area. Development of technology requires a lot of investment in infrastructure, electricity, and skill power. Considering the deficiency in these factors, rural areas do not have a developed high-tech sector. As a result, advancement in technology might not lead to a decline in labour. On the contrary, high-tech employment might rise as more people are employed to install various technologies. In the Kenyan case, laptop for primary schools is an initiative that captures various areas of high-tech employment. Development of digital content, supplying electricity to all schools in rural areas, training teachers, and availing other facilities is necessary for the success of the project. This project will therefore contribute to an increase in high-tech employment in rural areas. Those who have received training in the technology will benefit from the project. Conversely, urban areas have a well-developed technology network. The region is therefore focusing on technology to improve efficiency hence the need to replace human labour with technology. Jobs that were original done by human beings are being substituted by technologies. Particular example is monitoring different jobs in a factory. Technology has now substituted human labour in monitoring movement of different jobs. Airlines industry is the second example where customers can book their tickets online, manage their booking online, check-in online, and execute various other personalised needs. This has reduced the number of labour required to serve as customer care agents. Question 5 OECD appreciates that skills and knowledge are essential in the world of technology. While skills help an individual to select, use, and manipulate information, knowledge comes in to aid in interpretation and decoding of information. Given this nature of skills, it is incumbent upon the government and business sector to train and educate employees on innovative technology required in the sector. Aware of the fact that technology keeps changing, it is necessary to update the acquired skills continuously. One of the avenues that can be exploited by the government and the business sector towards promoting progress of technology is to support research and development. A particular example demonstrating government support for research and development is the case of Queensland government that supports scientific research. Funding assistance, financial incentives, and policies are some of the channels exploited by Queensland Government to support research and development. In United States, investment in research and development have not only increased productivity but also boosted growth of the economy and generated innovative products and processes. At the same time, people are now living an improved quality of life. In a study by Campbell (2007), United States often finances for research and development. Figure 4: Research and Development allocation. Source: Campbell, (2007) Figure 4 compares research and development allocation in various countries. According to Campbell (2007, p. 4), spending in research and development grew at the rate of 21% and 10% in China and South Korea respectively between 1998 and 2004. This reflected overall economic growth being experienced in the two countries. OECD (2012) confirms that real research and development expenditure has been expanding fastest in Estonia, Korea, Portugal, and Turkey. Outside the OECD area, China recorded a spending of about 20% of GDP accordingly beating Japan. These facts indicate how research and development are related to a focus on long-term economic growth. Secondly, small and medium enterprises must be give support because they have proved to be innovative in technology, create employment, and enhance development of skills particularly in high-tech sectors. According to International Finance Corporation (2014), Small and Medium Enterprises contribute to growth of Sub-Saharan Africa. International Finance Corporation recognizes the need to offer financial support to SMEs in Africa. Funding provides a business with an opportunity to invest in high-tech and grow to its potentials consequently enabling an economy to reduce unemployment, increase output, and ultimately, realize economic growth. Specifically, IFC has a program that allows a business to borrow affordable and tailored credit for investment purposes. Development of infrastructural network is another area that have brought together government and business sector. To demonstrate progress in terms of infrastructural network, countries across the globe have a deadline in which they are supposed to have migrated to digital broadcasting. This means that a country that fails to beat the deadline lags behind. Digital migration is anticipated to offer more benefits as opposed to cost. One of the benefits is that viewers are exposed to variety of channels. Secondly, viewers will enjoy quality broadcast irrespective of their location, race, or colour. The economy will also benefit from advertisement carried out in various channels, which increases the possibility of demand in the economy. The government and business sector can also work together to develop policies that encourages the development of intellectual property. This is by strengthening protection of patents and copyright. This move would motivate companies to invest in innovation as well as concentrate on talent pool. The capacity to bring new products is beneficial to the entire economy because it builds demand. The advent of mobile money transfer is a good example of innovation that has increased the efficiency of transacting a business. Secondly, mobile phones with advanced features and fast internet connectivity has proved to be beneficial to business class. Reference List Australia Bureau of Statistics (ABS) 2011, Australian Labour Market Statistics, Oct 2011, cat. no. 6105.0, Australia Bureau of Statistics, Canberra. Campbell, SM 2007, Federal support for research and development, Congress of the U.S., Congressional Budget Office, Arlington, Va. International Finance Corporation (IFC) 2014, SME Initiatives, viewed 23 May 2014, http://www.ifc.org/wps/wcm/connect/region__ext_content/regions/sub- saharan+africa/advisory+services/sustainablebusiness/sme_initiatives. Labour Force Australia 2009, Labour Force Historical Timeseries, Australia, Cat. no. 6204.0.55.001, labour Force Australia, Canberra. OECD 2012, Main Science and Technology Indicators, OECD Publishing, viewed 23 May 2014, http://www.oecd-ilibrary.org/science-and-technology/main-science- and-technology-indicators_2304277x. Qantas 2012, Qantas Annual Report 2012. Viewed 23 May 2014, http://www.qantas.com.au/travel/airlines/investors-annual-reports/global/en. Taylo, J 2006, Principles of Economics, Cengage Learning, Mason. United Airlines Inc 2014, In-flight entertainment, viewed 26 March 2014, http://www.united.com/web/en- US/content/travel/inflight/entertainment/default.aspx. U.S Bureau of Labour Statistics 2013, Occupations with the most job growth, viewed, 23 May 2014, http://www.bls.gov/emp/ep_table_104.htm. Read More