Technological Revolution

This paper takes a look at the effects of modern technological developments on the evolution of the global economy. As a result, the reader gleans a better understanding of the links between human sociopolitical and economic development and the introduction of relevant technologies.

Keywords Cellular technology; Digital Divide; E-Commerce; Globalization; LDCs; The Technological Revolution

Work & the Economy > The Technological Revolution

Overview

In 1985, US president Ronald Reagan stood before a group of Nobel Prize–winning scientists who had gathered at the White House. "You, on the cutting edge of technology," he said, "have already made yesterday's impossibilities the commonplace realities of today" (Simpson, 1988).

Those who had gathered on the White House lawn that day were among the most exceptional minds on the planet, presenting ideas that would change the course of history. Indeed, the scientific and technological breakthroughs humanity have marked extraordinary steps forward in its evolution. The steam engine ushered in a new era in transportation. The telephone linked together people who lived great distances from one another. More recently, the Internet and satellite technologies have created extensive networks throughout the globe. Humanity and technology seem to evolve together.

In the last two decades, modern technological advancements have done more than just benefit business, economic development, and public health. It has helped forge together the countless economies and political systems into one, global network. The process of "globalization" has created one broad-reaching economic institution, operating beyond the limitations of the modern nation-state.

This paper investigates the effects of modern technological developments on the evolution of the global economy. As a result, the reader gleans a better understanding of the links between human sociopolitical and economic development and the introduction of relevant technologies.

The Internet

History

In 1962, it was assumed that communications networks via telephonic technologies were about as far as science would go. At the World's Fair in 1964, a "Picturephone" was displayed proudly by communications giant AT&T, a mere update of a picture phone that was introduced at another World's Fair thirty years earlier.

Meanwhile, however, researchers were working behind closed doors to find a way to not only speak with colleagues over great distances, but to exchange data and information as well. The Advanced Research Projects Agency (ARPA) was established for this purpose as a means to create links between US military interests looking to defend against attacks by the Soviet Union. Gradually, ARPANET (the ARPA network) began to take on a less militaristic application, as only a few thousand computer terminals increased exponentially in volume. People were using the earliest forms of the Internet for data transfer, commerce, and other applications. As more and more people acquired computers, the Internet continued to grow exponentially. By the last decade of the twentieth century, the number of Internet host centers grew from four in the 1960s to 300,000 spanning the globe (Computer History Museum, 2006). Today, with the overwhelming number of personal and portable computers, tablets, and integrated cellular phone devices, there are few nations on earth in which one cannot find one or more avenues of access to the Internet.

E-Commerce

The Internet has done more than simply enhance communications capabilities for the post-industrial world. In truth, it has created entirely new markets and industries around the globe. By 2003, Internet "e-commerce" generated nearly US$7 billion in revenues, almost 10 percent of all sales. E-commerce has become the dominant form of business-to-business transactions, due in no small part to the fact that businesses can connect from all over the world without onerous interstate regulations and national interference. The relative simplicity, efficiency, and speed by which transactions take place over the Internet, therefore, have created a sort of "peer pressure" for those political institutions that do not embrace e-commerce in its current form are considered to be less of a value to potential business partners (Mann, 2001).

Hope for the Impoverished

In sub-Saharan Africa great potentials are seen to exist with the introduction of Internet access. In a region that has a poverty rate of 45 to 50 percent, countless individuals lack access to educational resources, social services, and business connections. They lack an ability to tap into key regional and international markets as well as training programs that can help them participate in the development of their own regional and national economies (The World Bank Group, 1996).

It is widely held, therefore, that facilitating access to the Internet can help reverse this trend (Juma & Moyer, 2008). In fact, many nations are investing in the development of information science technology to increase Internet activity. In South Africa, for example, a Soweto project was recently implemented to ensure that all 1.5 million students of that school district have access to the Internet. President Thabo Mbecki has made bridging the gap between those who have such access and those who do not (known as the "digital divide") a top priority, saying that technological literacy is key to the country's participation in the global economy (Itano, 2001).

What is it that the Internet does to alleviate poverty in the developing world and ensure continued prosperity in the industrialized world? The vast networks created by the Internet deliver information of vital import to virtually every industry. From increasing the speed by which payments are being made to monitoring outbreaks of disease, the Internet has critical applications for the agricultural sector. Education, the media, and manufacturing are among the myriad of industries that benefit on many levels from the possibilities offered by the "information superhighway" (Thomas, 2007). While the United States continues to lead the world in terms of Internet users and hosts, many more nations are becoming strong players in the new marketplaces created by this technological juggernaut. Brazil and China, for example, have long been considered on the cusp of economic power in the high technology industries but, thanks to their increased investment in this continuously evolving market, are now shifting the market profile away from a singularly dominated institution (Inarritu, et al., 2007).

Indeed, the Internet has become arguably the crown jewel in the global economy. Then again, as this paper has suggested, there are many nations that have less of a stake in the Internet market. For them, there are still other aspects of this post-industrial "technological revolution" that have relevance for the global economy.

Telecommunications

A decade after the American Civil War came to an end, Alexander Graham Bell, a speech expert, contacted a senior official at the Smithsonian Institution to seek his advice about a concept upon which he had stumbled. By passing an electrical current through a copper wire, Bell explained, a noise could be heard at the other end. When he brought his device to the Smithsonian, the secretary of the institution listened and indeed heard the transmission of a voice through Bell's technology. Bell, who was not an engineer or even all too familiar with electricity, asked the official, Joseph Henry, for his advice about how to develop the technology. Henry's response of Bell's "telephone" was one of the greater understatements in human history: "You have the germ of a great invention," he said. "Work at it" (MacKenzie, 2003).

Less than half a century after Bell's telephone was developed, there were fifteen million of the devices around the globe.

By the mid-twentieth century, however, land lines were not the only form of telephony. The development of "cellular" technology (which is based on the division of service areas into "cells") has been slow, to be sure. It was first introduced in 1947 but not widely researched as a private mode of communication until the late 1970s. Once it had been developed accordingly, however, demand far outstretched the supply of cellular technology within a decade (Bellis, 2008).

As of 2012, the number of cellular phones exceeded six billion around the globe (by contrast, in 1991, that figure reached sixteen million, according to the International Telecommunication Union). Forecasts have projected that the total number of cell phones worldwide will surpass the global population by 2014. In 2013, out of the world’s estimated seven billion people, more than six billion had access to cellular phones.

As landline telephones linked people around the world beginning in the nineteenth century, cellular communications technology has successfully created linkages between people across the globe, even in the most remote locations, in the twenty-first century. While landline telephones have facilitated many forms of commerce, wireless technology takes communication to the next level, enabling business to be conducted in virtually any location and at any time. It has created a new degree of convenience for customers and entrepreneurs alike, facilitated corporate operations, improved competitiveness, and even helped enhance marketing abilities (Keng, Nah & Hong, 2006). Cellular technology, which today integrates telecommunications, Internet access, and other computing abilities, in essence creates small, mobile offices and, as a result, radically transforms the way business is conducted in the global economy.

While cellular technology first flourished in industrialized nations in North America, Europe, Australia, and East Asia, it is no longer localized to the wealthier countries of the world. Indeed, the developing world is increasingly becoming proficient with this technology, and it has helped their populations in a similar vein. Indeed, the introduction of cellular telephony has had a positive effect on the lives of those who live at or below the poverty level. Telephone poles used for landline phone networks, which are less extensive and far less reliable in rural areas, are being replaced with cell towers and consistent service. Trade networks have been increasingly forged and employment searches significantly aided. Even the cost of using a telephone is reduced with the myriad subscriber resources.

It is no surprise, therefore, that less developed countries (LDCs) are increasingly adopting cellular technologies in their pursuit of participation in the global economy. In four years, for example, the number of Nigerians with cell phones jumped exponentially from 370,000 in 2001 to 16.8 million in 2005. The Philippines has seen a similar explosion in cellular use, from about seven million subscribers in 2000 to forty million in 2006, making cellular technologies the preferred form of communication in that country (World Bank, 2006).

The contributions of cell phones and other modern forms of telecommunications technologies to the global economy are not limited to the confines of the business environment, either. Commerce can only successfully take place in a stable, conducive economic environment. Few regions can sustain indefinitely both global commerce and sociopolitical stability. It is in this arena that improved telecommunications also plays a beneficial role. Conflict prevention, mitigation, and resolution all require communication, and the extensive networks offered by cellular and other modern telecommunications systems mean parties will be able to connect and address divisive issues before they can cost a society a stake in the global economy (Wehrenfennig, 2007). From local crisis hotlines to international networks, modern telecommunications capabilities help maintain stability in an ever-developing international marketplace.

The world has come a great distance since the mid-nineteenth century when Alexander Graham Bell introduced his prototype telephone to the world. Since then, the international community has used it to connect to one another, both for personal contact and for business development. Modern applications of telecommunications technologies have taken this evolution even farther, enabling people in every corner of the world to connect to the global economy.

Indeed, modern technology has been a central figure in the development and maintenance of the global economy. Still, commercial connectivity is but one part of the international business system. There is still an issue regarding how best to transfer goods and services to international contacts.

Transportation

Technical innovations such as the Internet and cellular communications have made globalization much easier in a number of critical arenas. Arguably, one of the most important of these areas is that of cost: email is much less expensive than regular postal services and cellular subscriptions are less expensive than long-distance calling plans. As the global economy still requires methods for transferring goods and services between participating international parties, transportation must also be modernized to mitigate costs.

While the world may have changed significantly over the past two millennia, the need to transport people and goods has not. Humanity has long needed to find ways to traverse long distances, whether by land, sea ,or air. In the new global economy of the twenty-first century, the need for transportation is moot; the real issue is how to transport in a way that is both quick and inexpensive.

Shipping

In 2006, a controversy over foreign-owned shipping terminals in the United States cast a light on the evolution of transportation in the post-industrial era. In addition to the obvious implications of a foreign company operating a major port in another country as evidence of the burgeoning globalization of shipping, the attempt by a Dubai-based company to operate a port in the coastal United States also presents an interesting illustration of the increasing ease by which shipments are offloaded and transported.

Previously, shipping consisted of multiple legs — for example, a shipment of goods was delivered to a distribution port, where it was broken up and held in storage facilities awaiting placement onto trucks or trains (or both). The process was considered onerous, expensive, and time-consuming, not to mention localized to only a few ports that had the capacity to offload large bulk orders. The subsequent modification of shipping systems is reflective of the need to simplify the process, improve technologies, and increase the number of available ports.

As the computer became the primary conduit by which information is transferred, the shipping container (a lightweight casing that contains trailer-sized shipments) became the preferred method by which goods are distributed. One scholar noted that the simplification of shipping and transportation of goods with such containers has made an important impact on the global economy by making the process easier, less expensive, and far more adaptable to ports around the globe:

Land Transport

Despite the obvious benefits of the global economy on commerce, and the great examples of new technologies that contribute to globalization, transportation technologies have remained more modest and, at times, outdated. The cause is something that is intrinsic to a "global" economy — geography. Goods and products must often travel great distances from port to port and they must still be transported over land to the customer. There are but two avenues for this transportation, trucks and train, and both are expensive. Trucks are the preferred land transportation, reaching virtually any location, whereas trains run along a set of transcontinental rail lines.

As suggested earlier, both of these modes of transport are indeed expensive. Rail transportation, for example, is faced with a difficult challenge by the volume of containers that can be carried on each car. As demand in the global economy continues to rise, more and more shipments must be carried on the rails. As a response, railroad cars with double the cargo capacity are being built and introduced, and more efficient train engines are being developed (Everett, 2008). In the preferred transportation field (trucking), increased volume also calls for more trucks on the roads, which requires the use of more fuel. Here too, engineers and policymakers are seeking more efficient engines as well as trucks that run on alternative fuel sources (Tucker, 2008). Then again, such technological developments are experiencing some hesitation from the industry, as some changes are being met with skepticism about the impact on business ("Surviving and thriving," 2008).

In an ever-developing global economy, it only follows that technology has evolved alongside it. In the case of shipping transportation, however, it appears that overwhelming demand for goods and products that come from this new world order has not yet fostered significant change. There have been some technological improvements, to be sure, but the world of transportation is still slowly adjusting to the changes in global commerce.

Conclusion

The British scientist William Kelvin was known as an expert in a variety of disciplines, including engineering and physics. However, his view of the future was somewhat uninformed and, in hindsight, ironically comedic. At the beginning of the twentieth century, he declared, "radio has no future"; "heavier-than-air flying machines are impossible"; and "x-rays will prove to be a hoax" ("Lord Kelvin's bad predictions," 2008).

Indeed, Lord Kelvin's prognostications proved far from the truth — technology has evolved far beyond the expectations of those who lived only a century ago. These advancements have coincided with the further evolution of international commerce. With the development of the global economy over the last few decades, the link between technology and the international economic system has been further strengthened, particularly as new innovations have been central to building on that new international regime.

This paper has taken a look at three areas of pivotal importance to the global economy. The Internet, for example, has provided strong links between business partners and individuals alike from every corner of the world. Cellular technology has also largely answered the limitations of the wire-based telecommunications world as well as facilitated mobility. Even transportation has seen upgrades that are vital to delivery of shipments to customers in even the most remote of locations.

As the global economy continues to take shape based on technological innovations, the question that remains for international participants is one of access. Fortunately, the prevalence of such technology has made such access more affordable for most socioeconomic strata. There remains considerable development to be done, particularly regarding delivery and increased access to such technology. Still, with the constant introduction of new systems, networks, and devices, the number of participants entering into and prospering as a result of their involvement will likely continue to grow.

Terms & Concepts

Cellular Technology: Telephony that relies on regional centers rather than land-based telephone networks.

Digital Divide: Differential between those who have Internet and other high technologies and those who do not.

E-Commerce: "Electronic commerce," a form of business transaction that takes place via the Internet.

Globalization: Economic trend by which national markets are increasingly being centralized on a global scale.

LDCs: Less developed countries.

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Suggested Reading

Burnson, P. (2002). Hong Kong seizes on the technology tool. World Trade, 15. Retrieved August 27, 2008, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=7910050&site=ehost-live

Campbell, H. A. (2013). Religion and the Internet: a microcosm for studying Internet trends and implications. New Media and Society, 15, 680–694. Retrieved October 30, 2013 from EBSCO online database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=89549526

E-commerce yet to improve developing world. (2002). World Trade, 15, 14. Retrieved August 27, 2008, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=6369540&site=ehost-live

Going digital. (1998). Fortune, 137, 19-24. Retrieved August 27, 2008, from EBSCO Online Database Academic Search Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=9712036503&site=ehost-live

Hoske, M.T. (2000). Technology enables economic success, responsibilities: Economist. Control Engineering, 47. Retrieved August 27, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=3351579&site=ehost-live