The Information Age and Economic Activity - Coursework Example

The Information Age and Economic Activity Institution: Name: Introduction The Information age also referred to as the ‘’New media age’’ or the Computer age is an era in the history of society that witnessed a change from traditional industries that emerged from the industrial revolution, to the development of an economy that was founded on information computerization. The emergence of the Information age can be traced back to after the Second World War, where new technological developments were discovered after intensive research. This include; computers, computerized machineries, the internet, intranet, fiber optics and many others. The invention of such technologies progressively transformed the economy in various ways. Even today, we work and live in the information age. This essay seeks to examine how technology has conditioned the nature and extent economic activity during the information age. The scope of the analysis will be grounded on evaluating both the positive and negative influence of technology in shaping the nature and extent of economic activity. Technological developments in the information age have conditioned the nature and extent of economic activities through various ways. One of the ways is through changing the nature of outputs attained from economic activities. Quah, (1997) highlights that consumption and production has moved away from objects to services and information. This condition differs from the industrial revolution era whereby the production of tangible goods was the center of economic activity. In the information age, outputs are majorly measured in terms of weightless or intangible goods. Examples of weightless goods include the internet, computer software’s, managerial consulting, telecommunications and financial products (Quah, 1997). Changing the nature of products attained by economic activities has been usefully in enhancing product diversity. This is because consumers have a wide selection of both tangible and intangible goods. UNI World Conference (2000) also discloses that technology in the information age has led to an increasing interest in people as a corporate asset. During the industrial revolution human energy was considered as more important as opposed to their intellectual capability. This is because manual labor and human effort was very essential in economic activity. However, in the information age the performance of organizations is mainly based on their intellectual capability of the workers or what is referred to as intellectual capital which includes experience, information and intellectual property. An additional way in which technology in the information age has conditioned the nature and extent of economic activities is through influencing operations in the business environment. Cameron (1998) highlights that; the first element of a growing economy is based on the business environment. This is because the condition of the business environment plays a significant role of attracting and influencing investment that is vital for economic development. For instance, the capacity of foreign direct investment (FDI) and also the proportion of global trade carried out by multinational companies have grown considerably over the past years. This is basically due to the use of information technology such as the internet that has enabled the transfer of technical knowledge that is vital for foreign direct investment. In addition, technology has also enabled a spillover of Foreign Direct Investment to the wider global economy. A study conducted by Zhiqiang, (2002) on the Technology Spillover and Foreign Direct Investment revealed that technology has been a useful tool in the growth of manufacturing industries in China, this has further lead to an increase in FDI both in the domestic and external market and thus improving the economy of both China and other nations. Styles, (2002) also highlights that technology in the information age such as the use computers and the internet have transformed how countries and companies undertake economic activities such export. The use of the internet for instance gave rise to what is referred to as an internet revolution whereby economic activities such as exports can also be undertake though the internet or what is referred to as E-commerce. A research done by University of New South Wales (UNSW) and Austrade revealed that widespread use of the internet and the adoption e-commerce by Australian exporters has brought about a big change to the international business strategies essentially through enhancing business growth and profitability. The study therefore proposes that exporters should adopt e-commerce as an essential part of their business activities in order for them to be more competitive in the changing business environment. This is because successful exporters use e-commerce for the for the purpose of marketing and sales. For example 77% of exporters used e-commerce to make adverts and also to respond to inquiries made by customers. The adoption of e-commerce has therefore improved export activities. Technology in the information age has also enhanced globalization which is the interconnection between societies or across the globe. Through the use of technology such as the internet and web space; people, nations and organizations across the world can interact through exchanging ideas, products and other economic activities. The implication of globalization is that there has been emergence of interdependence in economic activities. Lawlor, (2007) highlights that; globalization has enabled organizations to adopt knowledge and skills from different places across the world and thus broadening their horizon which further results to increased innovation and collaboration. The capability to transfer information and communicate all around the world also enables organizations to concentrate on their core capabilities or competencies which leads to improved performance and further improves the earnings of the organization. It can be argued that many organizations today work in collaboration with each other; this has greatly been facilitated by technology in the information age. It can also be argued that technology in the information age has increased the level of industrialization which has further improved the economies of many countries essentially in Asia. A report on Trade and Development Report (1996) reveals that over the previous thirty years, a number of Asian countries become rapidly industrialized. These include countries such as Singapore, Hong Kong, South Korea, China and Taiwan. According to the report, the economic growth of these countries was about 7% per annum within the emergence new technology associated to the information age. Krugman ,(1994) however discloses that there has been a controversy concerning whether the economic growth rates of these countries was due to an increase in the level of investment or technological progress linked to the information age. Nevertheless, Dani (1995) states that the economic progress of the Asian nations can be linked to the development of industries that manufacture new technologies and the ability to successfully adopt foreign technologies. For instance South Korea was a country that was poorer than many African countries in the Sub-Saharan region, however as a result of its export orientation and the ability to imitate foreign technology, South Korea was able to uplift its economy. Also today, China which is one of the world’s leading economies has rapidly industrialized due to manufacturing new technologies such as computers, mobile phones and other electronic devices that are used in the information era. Technological developments in the information age have also influenced the extent and nature economic activities by improving the level of literacy that people possess. Literacy can defined as the capability to understand and then employ information that is printed in daily activities such as at work, home and community. Literacy also involves the ability to attain the goals that one has set and the ability to advance ones potential and knowledge. As the information age continues, policy developers all over the world are progressively concerned about the role played by knowledge and skills in improving the innovation, productivity and growth of the economy. In addition, continuous changes in the labor market also dictate the fact that literacy is an essential aspect for the modern workforce (OECD, 2000). For example, in many nations, higher literacy levels are linked to bigger percentage of knowledge jobs that are required in the economy. As a result literacy skills determine the probability of one being employed in the white collar labor market. Many nations therefore work towards ensuring that every individual in the society is literate. This is because a society that is literate has the ability to transform the economy by using the knowledge and skills they have learnt into activities that can enhance economic development. Information technologies such as the internet and computers have therefore been elements in facilitating an increase in literacy levels. This is because learning material can now be acquired through technologies such as the internet (OECD, 2000). Technology in the information age has also influenced an increase in the number of human resource. For instance, the nature of economic activities in the information age has enabled the integration of more women into the labor market. During the period of the industrial revolution, only few women were part of the labor market. This was because the labor market required a lot of manual energy that was used in the manufacturing industries. With the emergence of the information age more women have been integrated into the labor market. Castells, (2010) highlights that the information age transformed the structure of employment in the sense that there has been growth in economies that are dependent on service employment which include social services and business services which are the significant attributes of the informational economy. Castells, (2010) further discloses that period between 1980-1980 witnessed an increase in the integration of women into the service economy. Although in many places of the world such as Asia and Africa, much of labor is still based agriculture where many women still work on agricultural land. Nevertheless, in developed nations 85% of women have been integrated into the labor market. The women work in service industries such as insurance companies and banks where they use technology such as the internet and computers to deliver service. It can therefore be argued that the information has transformed the nature of the labor economy by increasing the number of human resource. Technology in the information age has also changed the nature and extent of economic activities by easing the workflow. Before the emergence of the information age workers and even companies used to pass information by walking physically to the destination where the information was required. However with the emergence of new technology such as the internet and personal computers organizations can easily pass information from one department to another. The only challenge that arose was when organizations begun to use workflow software’s that were not standardized. In order to solve these particular problem software developers created transmission languages and protocols such as HTML that deal with web documents and IP/TCP that handle electric data (Lawlor, 2007). An essential feature technology in the information age is that it has enabled a reduction in the cost production of goods. The cost that is linked to producing the initial copy of a good that is information intensive is usually large however the cost of reproducing more copies is insignificant, For example, software that costs a huge amount to produce can be copied or be duplicated on a video tape for a small amount of money. Likewise, a lot money is spent by businesses in building and maintain websites, however many consumers can use the website over and over again without the organization incurring additional costs. It can therefore be argued that the cost of production is basically low due to the ability to reuse products over and over again (Yorukoglu and Cooley, 2000). Technology in the information age has also conditioned the nature and extent of economic activities in negative ways. One of the ways is through the development of a network of societies which further influenced negative economic occurrences such as the recent global financial crisis. Castells (2011) highlights that the recent financial crisis that exploded at the end of the year 2008, sent the world economy into tail spin that arose as a result of the dynamics of having a global economy. One of the major factors that instigated the crisis was the rise and expansion of the information age. According to Castells (2011) the technological changes in the running of finance provided the basis for running global financial markets through the use of global computer networks. Financial institutions were also equipped with computational capacities that were would use to run advanced mathematical models. The devised models were therefore able to manage the rising complexity of financial systems and thus creating an interdependent financial market through the use of information technology. The implication of the interdependent financial market is that in the event that there was lack of transparency in the business activities undertaken by the market, the crisis would definitely be felt by many nations across the globe. Castells (2011) therefore argues that the rise of the information age also greatly contributed the recent financial crisis. Also, with the advancement in the supply of high information products such as the internet, Fibre optic cables, websites, intranets and many others , the producers of these products which are also referred to as high human capital goods experience more productivity as opposed to goods that have low human capital or goods that have low information. According to Yorukoglu and Cooley, (2000) the implication of this is that there has been an income gap that exists between the two. More significantly, as discussed earlier information goods do not have a high costs of production and distribution based on the fact that they can be reused. This implies that efficiency increases when distributing and producing the technology at minimal costs. Consequently, information goods bring the highest income, highest output and also human capital. Therefore, the reduction of the costs of production and distribution of information goods supports the win – all and take all nature situations. The overall implication of this is that with continued technological advancement in the information age, the income gap between the rich and the poor becomes wider based on the fact that economic activities will mainly benefit the rich who deal with information goods (Yorukoglu and Cooley, 2000). Technology in the information age has also lead to a slowdown in the extent of productivity. Yorukoglu and Cooley, (2000) argue that the development of a new product has to utilize economic resources. Furthermore, the rise in the amount if labor that is given to the development of a new product can be termed as an investment in welfare and future output. However, the investment that is required in order to come up with a new information product that does not take into account the predictable measures of productivity; this therefore results to a slowdown in the productivity measure. Yorukoglu and Cooley, (2000) further highlight that this slowdown in the measure of productivity has greatly been witnessed in the past 20 years as more and more information goods are produced in the information age. Conclusion The above discussion has presented various views concerning the information age and its influence on the nature and extent of economic activities. Various arguments have been raised to support the fact that the information age has offered positive influences on the nature and extent of economic activities this include; changing the nature of outputs attained from economic activities, influencing operations of business activities such as exports and FDI, enhancing globalization and improving economies and also increasing human resource. On the other hand negative implications presented include; influencing the financial crisis, reduced productivity and increasing inequality. In conclusion, this paper states that the information age has brought about significant change in the nature and extent of business activities; however it should implemented with care essentially in the changing business environment. References Cameron, G. (1998). Economic Growth in the Information Age. The Journal of International Affairs. 51( 2), pp. 447-72. Castells,M.(2010). The Information Age Economy, Society, and Culture. John Wiley & Sons, Ltd., Publication. Dani Rodrik, (1995). “Getting Interventions Right: How South Korea and Taiwan Grew Rich .EconomicPolicy, 20 (95) , p. 53-97. Krugman , P.(1994). The Myth of Asia or Miracle. Foreign Affair , 73. p. 62 Lawlor, B.(2007). The Age of Globalization: Impact of Information Technology on Global Business Strategies. Capstone Project OECD (2000). The international Adult literacy survey, Literacy in the Information Age. OECD Publications . Quah, D.(1997).Increasingly Weightless Economies . Bank of England Quarterly Bulletin. p. 49- 56. Styles, C.(2002). The information age. Sage. UNCTAD. (1996). Trade and Development Report. United Nations. UNI World Conference. (2000). Intellectual Capital People First in the Information Age Economy. UNI publication. Yorukoglu, M and Cooley, F.( 2000). The University of Chicago. Some Macroeconomic Implications of an Information Age. The University of Chicago. Zhiqiang, L.(2002). Foreign Direct Investment and Technology Spillover: Evidence from China. Journal of Comparative Economics. Read More