Emergic: Rajesh Jain's Blog

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Digital Divisions

August 6th, 2003 · No Comments

Dr. Fariborz Ghadar is Director of the Center for Global Business Studies at Penn State. He writes:

The business community will need to embrace two major impacts of technology for the next quarter century: First, the spread of technology will drive the more developed nations of the world and their businesses closer together. Second, this same spread of technology will leave less developed nations behind unless action is taken.

Over time, countries and alliances will build up technology reserves in the form of human experience and physical capital that allow them to better exploit the research done around the globe. But countries and industries unable to break free from an isolationist mindset will find themselves continually outmaneuvered by these colluding corporate empires, and as a result will be left to the wayside.

Unable to take advantage of the research done in the high-income nations and lacking the resources for investment or the requisite infrastructure to attract foreign capital, impoverished nations will find themselves stuck in a vicious cycle in which they are unable to reach the critical mass of technological prowess needed to break through into the world scene.

As a result of this, some countries will be left on the far side of a massive technology gap.

One possible solution for breaking this chain of events is to develop the natural resources of a country in the hope that any newfound wealth will be adequate enough to introduce new technology.

An alternative solution could come in the form of technology transfers. The idea here is that as technologies age, less developed countries will narrow the technology gap by gaining a comparative advantage due to the reduced spending on R&D and that the labor in the more developed countries could be better spent on a more advanced product, leaving a market for the less skilled to fill.

But both of these options require a tremendous amount of foresight on the part of a nation in terms of resource management, a good legal system to protect the interests of investors, and the will to aggressively invest in technologies that may flounder, a hard proposition for a country with little to spare.

The ultimate goal for a country is to harness its leadership skills and its infrastructure in the hope of “leap-frogging” ahead, in which a nation goes directly to an advanced system like fiber optic cable for its telephone needs, while skipping an antiquated technology like copper cable. If these nations fail to reach par in terms of technological advancement, their shortcomings will be felt well beyond the boundaries of their own state.

This is where the next set of opportunities lie: enabling the emerging markets (technology impoversihed nations) to adopt affordable technology solutions to catch-up (and perhaps leapfrog), thus crossing the technology chasm.

Tags: Emerging Markets

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