Scientific advances and new technology can impact the world’s economies.
A United Nations Conference on Trade and Development (UNCTAD) study suggests that Information & Communications Technologies (ICT) can impact the economic performance, employment level, innovation, privacy and security, education, health, democratic processes, and environment of countries at multiple levels (macro, firm, individual).
Most of the empirical research examined by the UNCTAD show positive ICT impacts—for economies, businesses, poor communities, and individuals. The impacts are direct and indirect, and include impacts across economic, social, and environmental realms. There is a case study and some macro-level evidence that ICT may contribute to poverty alleviation.
According to Leo Brincat, a politician writing for The Sunday Times, “There is no doubt that scientific advances and technological change have been, are, and will remain in the coming years important drivers of the globalization process. They have been conducive to the creation, distribution, and exploitation of knowledge in such a manner that they have served as a major source of competitive advantage, wealth creation, and improvement in the quality of life of many nations.
“The growing impact of ICT on globalization is evidenced by the fact that it has led to a rapid application of recent scientific advances in new products and processes, a high rate of innovation across various countries, as well as a shift to more knowledge-intensive industries and services, together with rising skill requirements.”
Brincat also points out that ICT has had a strong impact on productivity in many countries, particularly when accompanied by organizational change and better worker skills, and “it has also:
- helped to improve performance in previously stagnant services sectors;
- facilitated communications;
- reduced the costs of transaction; and
- enabled more extensive networking and co-operation among firms.”
Developed countries and some developing countries have embraced ICT and are in a very good position to further enhance the well-being of their nations. At a micro level, companies of all shapes and sizes have realised that competition is a necessity, with firms investing in innovation and in efficiency—enhancing technology if they can expect sufficient returns and if competition forces them to do so.
The Digital Divide
An area that has received significant attention from policymakers is the question of a digital divide between individuals, organizations, and countries. A major preoccupation of the World Summit on the Information Society was to narrow the digital divide. For instance, the Geneva Declaration of Principles referred to the goal of the Declaration as “…bridging the digital divide and ensuring harmonious, fair, and equitable development for all…” Concern over digital divides is based on the assumption that ICT is, on balance, beneficial and that those without access to it are relatively disadvantaged. For individuals, negative impacts may range from inconvenience to more serious outcomes, such as employment disadvantage due to lack of familiarity with ICT. For economies, the lack of ICT access may make existing country divides greater, as the global economy relies increasingly on ICT to function efficiently and effectively.
ICT Propagation—Potential Investment Criteria
Currently, according to the Levin Institute (www.globalization101.org), portfolio investment earnings are more likely to be tied to the broader macroeconomic indicators of a country, such as overall market capitalization of an economy, and thus can be more sensitive to factors such as:
- high national economic growth rates
- exchange rate stability
- general macroeconomic stability
- levels of foreign exchange reserves held by the central bank
- general health of the foreign banking system
- liquidity of the stock and bond market
- interest rates
Given the positive impact that ICT has on the economic well-being of any particular nation, financial investors may start to look at other indicators such as ICT use and propagation as a means of gauging if investment in a particular nation is warranted.