Technology and Globalization

[This is the third in a series of articles on globalization.]

One factor that is driving change in global markets is the impact that technology, particularly information technology (IT), is having on the growth and economic development of all countries, regardless of the prior level of industrial capacity. Among other things, IT facilitates the reduction of manufacturing costs and the introduction of value-added manufacturing processes, as well as the ability for countries and their companies to gain access to markets that would have been closed or prohibitively expensive in the past. For example, commentators have suggested that of all the challenges confronting sub-Saharan Africa, the most important is ensuring that the region is able to participate in the IT revolution. They make it clear that failure in this area will foreclose tremendous opportunities for communication with the outside world and the development of relationships with supplies, customers and competitors. The ability to acquire and deploy IT opens up a wide range of opportunities for developing countries, including each of the following:

Standard of Living. IT can lead to substantial improvements in the standard of living and quality of life for citizens of developing countries. For example, governments can use computers and other IT tools to reduce crime and increase the level of public safety. Health organizations can employ technology to enhance the delivery of medical aid and other assistance to isolated areas in the developing world, including consultations with foreign experts through videoconferencing and high-speed transmission of medical images. Businesses should be able to use IT to improve business processes, thereby enhancing the work experience for each of their employees. Finally, IT, particularly the Internet, allows the citizens of developing countries to gain access to information, educational programs and entertainment from all over the world.

Commerce. IT is being deployed in a wide range of commercial settings, thereby creating a virtual marketplace that operates 24 hours a day every day of the year all around the world. Businesses in developing countries can conduct transactions with customers and vendors located thousands of miles away using secure payment systems that guarantee that funds will be moved quickly and efficiently without delays. Other IT tools, such as teleconferencing and online meeting rooms, allow managers in developing countries to communicate with customers and colleagues in other parts of the country and in foreign markets. As a result, firms in developing countries are now able to gain access to cost-effective sources of raw materials and participate in procurement contests. IT also allows firms in developing countries to create new markets for their goods and services and readily expand their existing relationships with foreign customers.

Industrialization. IT has led to radical changes in product development and manufacturing processes. IT is a powerful communications tool between partners in different countries and allows them to quickly and reliably share information on product specifications, design issues, quality control and delivery and distribution. In addition, IT is increasingly important to suppliers and manufacturers who rely on it for procurement, billing, payment and tracking of shipping and delivery.

Education. IT can also be used to increase the distribution of much-needed education and training in developing countries. For example, IT facilitates delivery of lectures to remote locations on a real-time basis, and the Internet now allows users to access courses from anywhere at their convenience. IT can also be used to allow thousands of persons in the developing world to share information that would be hard for them to access normally, such as the resources found in libraries and other databases. Computer programs are also a powerful and efficient method to develop the problem-solving, critical thinking and creative skills necessary for development of indigenous management talent.

Government Services. Governments in developing countries have been roundly, and rightly, criticized for their failure to efficiently manage the services they provide to citizens and to business entities. The problem is particularly acute in the developing world, given that the state continues to occupy a substantial role in the local economy. Properly deployed, IT can be used by governments to monitor the activities of their departments and provide citizens with essential information regarding government services and various legal and regulatory requirements. Policymakers in developing countries can use the information available through the Internet to improve their planning processes, such as benchmarking performance against other developing countries and industrialized partners. Finally, IT can be used to stimulate communication between government and its citizens, providing individuals, businesses and organized groups with a way to tell their leaders what they think about government services and proposals.

Job Creation and Diversification. The explosion of IT and its related products and services also provides opportunities for job creation and diversification for developing countries. First, businesses in developing countries will need to create positions to perform and administer various IT-related functions. This will not be an easy task, given the current shortage of trained local workers; however, it can be overcome through targeted educational programs. Second, jobs may be created in response to trends in the United States and other industrialized countries of outsourcing certain IT-related services. Again, however, a competent and trained local workforce is essential for firms to be able to exploit these opportunities. Finally, developing countries may be able to participate in manufacturing of IT-related products, including hardware and software. This will permit diversification of manufacturing jobs out of traditional areas that are becoming obsolete or are being replaced with technology-based solutions.

All of these are opportunities that small and medium-sized companies can meet.