Global economy has tremendously developed in the recent years due to various factors. Some of the most crucial factors that have resulted into the shift of the global economy include advancement in the factors of movement, communication of knowledge that is economically useful and new trends in technology. In the past, there were various factors that affected global economy and it was difficult to bridge the gap but currently, global economy is at its peak and it is likely to move forward.
New technologies in terms of transportation and communication are very critical. Technology is a great determinant of income levels and many countries have shifted towards adaptation of modern technologies to meet the global standards. Exposure of a country to the different parts of the world means a lot of innovation and diffusion of critical information that assists in vital decision making. Technology has greatly helped in reducing the cost of transportation and also provision of information about products and services (Smith, 2000).
In the past, lack of effective technologies was a barrier to global economy. Sea transportation had great barriers during the era of sail high. Shipping of products between Asia and Europe or even across the Atlantic was limited to goods of high value as opposed to weight and also the cost of shipping the goods was extremely high. The invention and introduction of iron ships that were steam-powered in the 19th century reduced the cost of transportation but it reduced further after the introduction of modern technology which is faster and efficient (Bockmann, 2013).
In the transportation sector, various improvements have been made and this areas include air cargo, ocean shipping and land transportation. Transportation of delicate and perishable goods is now cost-effective thus enhancement of international trade. People can also access different parts of the world to make investments in the shortest time possible. Shipping costs via the ocean has also significantly reduced. Most of cargos can be shipped to different parts of the world and this results to economic integration globally.
Shipping in the past was cumbersome but recently the new technology has replaced small oil tankers by introduction of supertankers and also cargo carriers that are containerized. Transportation network via land has been integrated to enhance quicker and efficient delivery of goods. Land transport is very critical for international trade between countries that are closely connected and also connecting domestic production with international trade. Land transportation has recently developed with the introduction of electric trains and huge trucks that transport a significant amount of goods (Amin, 2000).
Communication and communication technology is also another fundamental factor in global international economy. ICT has enhanced global economic growth by improving the coordination of supply chain across different borders in an effective manner. Information sharing between key players of global economy is very critical. These key players include custom brokers, terminal operators, and shippers. Connectivity between these players ensures effective monitoring of production networks and punctuality in the delivery of goods and services. Development of ICT has also enhanced service trade such as research and development, data processing and business processes so as to reduce the cost of location globally (Mutula, 2007).
Factors that had several barriers when it comes to trade have currently been made easier. These factors that were knowledge intensive and costly in the past and are now tradable due to ICT include accounting, management consultancy, technical consultancy, market research, auditing, legal services and much more. ICT has also modernized the nature of tradable products from physical to digital goods. E-commerce for example has enhanced trading goods such as movies via CDs to making them available to consumers globally via the internet.
Technology through ICT has therefore converted physical goods into digital goods thus changing the market trend to focus on personal and impersonal services. ICT infrastructure is also shaping global economy because developing countries are also getting exposure to the entire world and obtaining vital information that is important to the economy. The gap between high income countries and those with low income is narrowing due to application of ICT in the economy and for the fact that it can be obtained at a cheaper cost unlike in the past. CITATION Doo12 \l 1033 (Doong, 2012)ICT also enhance international competitiveness. Some of the ways in which ICT impact trade include; internet banking, making reservations, selling and buying goods and much more. The labor market has been transformed by reducing the cost of searching for jobs globally. Geographical scope is also reduced because people can work out of their offices and those that are disadvantaged such as the old, can enjoy the outcome of ICT globally.
ICT has enhanced the accumulation of human capital in the global economy. A good example is online universities which offer several courses to interested parties across the planet. Acquisition of human capital is very critical to the global economy because people do not need to physically travel, but carry out their activities online. Income distribution and inequality has been streamlined by ICT because most of the transactions are currently done via the internet thus connecting the world (Audretsch, 2014).
With development in ICT worldwide, various trends are going to be witnessed in future. E-commerce has taken over in various businesses and this will improve global economy because of connectivity that is made possible by ICT. Expansion of ICT will also result to emergence of new players in sectors that are information-intensive globally and this will impact the global economy in a big way. Technology in general is very vital in driving global economy to the next level.
Amin, A. & Thrift, N., 1994. Living in the Global. In Global Shift Transforming the World Economy. pp. 1-22.
Audretsch, D.B., Lehmann, E.E. & Wright, M., 2014. Technology transfer in a global economy. Journal of Technology Transfer, 39(3), p.301-312.Bockmann, M., 2013. The Shared Economy: It is time to start caring about sharing; value creating factors in the shared economy. 1st IBA Bachelor Thesis Conference, (June), p.7. Available at: http://thelovettcenter.com/wp-content/uploads/2014/11/bockmann-shared-economy.pdf.
Doong, S.H. & Ho, S.-C., 2012. The impact of ICT development on the global digital divide. Electronic Commerce Research and Applications, 11(5), p.518-533. Available at: http://dx.doi.org/10.1016/j.elerap.2012.02.002.
Mutula, S.M. & Brakel, P.V., 2007. ICT skills readiness for the emerging global digital economy among small businesses in developing countries: Case study of Botswana. Library Hi Tech, 25(2), p.231-245.Smith, M.R., 2000. Global Shift: Transforming the World Economy (3rd edition). Canadian Journal of Sociology/Cahiers canadiens de sociologie, 25(3), p.399-401.
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