Drivers Of Globalization Technology Issues
How does technology drive globalization? Hovering over every issue that is. Drivers of today’s rapid globalization are improving.
Overview H.GUYFORD STEVER AND JANET H.MUROYAMA T HE EFFECTS OF TECHNOLOGICAL CHANGE on the global economic structure are creating immense transformations in the way companies and nations organize production, trade goods, invest capital, and develop new products and processes. Sophisticated information technologies permit instantaneous communication among the far-flung operations of global enterprises. New materials are revolutionizing sectors as diverse as construction and communications.
Advanced manufacturing technologies have altered long-standing patterns of productivity and employment. Improved air and sea transportation has greatly accelerated the worldwide flow of people and goods. All this has both created and mandated greater interdependence among firms and nations. The rapid rate of innovation and the dynamics of technology flows mean that comparative advantage is short-lived.
To maximize returns, arrangements such as transnational mergers and shared production agreements are sought to bring together partners with complementary interests and strengths. This permits both developed and developing countries to harness technology more efficiently, with the expectation of creating higher standards of living for all involved. Rapid technological innovation and the proliferation of transnational organizations are driving the formation of a global economy that sometimes conflicts with nationalistic concerns about maintaining comparative advantage and competitiveness.
Driving Technologies
It is indeed a time of transition for firms and governments alike. This book provides a broad overview of these issues and seeks to shed light on such areas as the changing nature of international competition, influences of new technologies on international trade, and economic and social concerns arising from differences in national cultures and standards of living associated with adoption and use of new technologies. And transnational joint ventures serve an important function by promoting global equilibrium. From an international perspective, the main issue is to sustain and improve world growth and improve growth per capita. This breaks down into the problems of Western Europe, Japan, the United States, Eastern Europe and the Soviet Union, and the problems of the more and less advanced developing countries. Robert Malpas noted that it becomes essential for all these players to harness technology for growth; however, this effort is frequently constrained by protectionism, concerns about intellectual property, the demands of international marketing and finance, and, of course, national security. The net result appears to be that emerging nations, with a few exceptions, have even more difficulty achieving the growth necessary to close the gap with leading nations.
Among the trends at the international level that can help sustain and improve world growth: the rebirth of interest in manufacturing, the spread of expert systems which multiply skills and help in the industrialization process, the acceptance of multinational corporations, the privatization of various industries, and the increased interest of governments in technology. As evidenced by the papers in this volume, these four relationships at the human, institutional, national, and international levels permeate discussions on the globalization of technology. In his keynote paper, Simon Ramo maintains that technological issues lie at the heart of most of the social, economic, and political issues of today, sometimes causing problems but more often offering possibilities for their solution. From this perspective, Ramo goes on to make several intriguing predictions about the role of technology in the future. Particularly powerful influences on the diffusion of new technological processes and products will be governments, corporations, national security concerns, and the rate of advances in scientific research. Technological discovery will become a global rather than an individual or national endeavor.
As a result, new mechanisms will be developed to facilitate the flow of technology, despite protectionist-nationalist tendencies to stem the free exchange of information. One of these influences impeding the flow of technology is national security concerns. Ramo, however, is optimistic about the direction of the two superpowers, predicting that offensive forces will be reduced, thereby lessening interference with the flow of advanced technology and allowing the application of military technologies to peacetime applications in manufacturing, transportation, and services. In scientific research, Ramo reiterates his belief that the expense of conducting such research, particularly in “big science” areas such as super colliders or in outer space, and the recognition that such knowledge must be shared to achieve maximum progress are driving scientists toward international cooperation. Since the role of government in setting a national direction for technology is so pervasive, its relationship to the private sector in the.
Productive use of technology will continue to be problematic. Yet, Ramo argues, it is only the government that can perform the regulatory functions necessary for the smooth operation of free enterprise activity that makes use of new technologies. It is also the government, he says, that will be the primary obstacle to diffusion of the benefits of technology to world society. As experts on the costs and benefits of developing technology, engineers are in a key position to contribute to policy formation of these issues.
For engineers to better prepare themselves for the future, Ramo suggests that engineering education place more emphasis on the links between engineering and its societal applications. The result, he says, will be engineers equipped to play a broader role in influencing government policies and practices regarding technological advance. Umberto Colombo’s analysis of technological and global economic issues emphasizes the impact of the technological revolution on production methods, types of products, labor markets, and on the importance of manufacturing to the economy. He compares manufacturing to agriculture—although it will no longer dominate the economy or provide the majority of jobs, it will continue to perform an important function even in a service-oriented society.
Certain key technologies are bringing about this transition, both creating new industries and rejuvenating mature ones, and in the process are changing patterns of development throughout the world. The rapid spread of innovation makes it imperative that firms quickly exploit any competitive advantage.
Moreover, their increased ability to operate in the global marketplace rein-forces the importance of cooperative agreements to advance innovation. Another force driving the trend toward cooperation is the increasingly scientific nature of technology, which requires that firms take a cross-disciplinary approach to solving problems. Colombo also argues that the technological revolution brings about a “dematerialization” of society, one element of which is that fewer raw materials are now needed to achieve a particular level of economic output and income generation. The globalization of technology is being spearheaded by North America, Western Europe, and Japan. Despite their influence in shaping a new pattern of global competition, each has unique problems.
The United States, though a leader in developing emergent technologies, is facing the double threat of enormous budget and trade deficits as well as deindustrialization of traditional economic sectors. Japan, which has demonstrated enormous success in commercializing new technologies, has an economy excessively dependent on exports. Western Europe has the cultural tradition and core of excellent research groups to facilitate its leadership in the technology arena, yet it lacks the cohesion necessary to develop strategic initiatives in important sectors. Colombo optimistically concludes that globalization will bring the emergence of many small and medium-size multinational firms that will rely on.
A network of technology alliances. Governments will provide oversight and strategic direction. The impact on developing countries will be enormous. With the help of new technologies, Third World countries can transform their raw materials and energy into value-added commodities and thereby accelerate economic development without dysfunctional effects. It is the responsibility of developed countries, Colombo concludes, to see that this happens. Though desirable, the alliances proposed by Colombo are not easily established. As Gerald Dinneen points out in his paper on trends in international technological cooperation, international arrangements, whether they be international marketing organizations, joint ventures, or creation of subsidiaries, are necessary if industries are to get a proper return on investment and remain competitive.
However, the “not-invented-here” syndrome, differences in standards, lack of protocols for transmission of data, and especially protectionist sentiment prevent companies and countries from collaborating. Despite these barriers, Dinneen says, international labs and exchanges of scholars and students in schools of engineering have been effective mechanisms for fostering international cooperation. Presenting the European perspective on technological cooperation, Harry Beckers comments on the impacts of the dissimilarities in the ways academicians and business people conduct research as well as differences in R&D support in the United States, Western Europe, and Japan. Western Europe, he says, faces the unique difficulties posed by its diversity and nationalistic tendencies. Nevertheless, there are a number of EEC programs that facilitate international cooperation among various countries, thereby helping to bring about “Europeanization” in the technology sector. Papers on three of today’s most crucial technologies—software, materials science, and information technologies—illustrate how the nature of the technologies themselves has created a global environment for research and applications despite the barriers mentioned above. George Pake describes a number of key advances in software: architecture of hardware systems used for software development; advances in writing, editing, running, and debugging of software; development of different programming languages; and systematic forward planning and task analysis.
The creativity so evident in software technology today is not in danger, Pake says, despite the trend toward greater standardization and the possibility that ossification of the development system could occur in the future. Pierre Aigrain addresses several provocative questions about materials, particularly pertaining to the rate at which discoveries are made, the extent to which applications are found, and the impact of these discoveries on industry and society. Citing the influence of the market and the continued interaction between science and materials research, Aigrain predicts that the rapid trajectory of materials discovery will continue.
However, processing. Costs, rather than the costs of the materials themselves, prevent materials from widespread application. The development of superconductors illustrates this point, and he concludes with a description of the impact these new materials in particular will have on industry and society. Lars Ramqvist provides insight on several of the cutting edge technologies that have had a major impact on information technologies. These include VLSI technology, computers, software and artificial intelligence, fiber optics, networks, and standards.
In addition, he looks at three main applications of information technologies—normal voice telephony, mobile telephony, and data communications—assessing, first, the current state of the art and, second, projections for the future. Ramqvist concludes that because information technologies allow for the dissemination of information, and thus understanding, they will form the basis for a more equitable, humane society.
Hiroshi Inose examines the telecommunications sector from a different angle—the effect of globalization on the entire industry. Particular technological advances, for example, the convergence of service modes and the microelectronics revolution, provide economies of scale but also require rapid inputs for capital investment. Among the problems and challenges Inose addresses are the software crisis, or the high cost of developing more sophisticated and diversified software; structural changes in industry, particularly in job design and labor requirements; standardization and maintaining interoperability between systems and equipment; reliability and security of systems against both external and internal disturbances; and integrity of information and protection of privacy. Like Ramqvist, Inose views telecommunications technology as the means to promote mutual understanding and cultural enrichment worldwide.
Perspectives on the impact of technology on another industrial sector—construction—are presented by Alden Yates who describes the most significant trends in the areas of construction-related design, construction equipment and methods, automation and expert systems, and construction management. Computer-aided design has, among other things, improved communication between designer and supplier and speeded up the design development process. Increases in productivity are being achieved through off-site fabrication and assembly and robotics.
Logistics practices, skill requirements, and labor-management relations are also changing as a result of these new technologies. Yates suggests that improved management methods and automation hold the greatest potential benefit for the construction sector, and that to remain competitive in the global marketplace, firms must look at their R&D commitments. In the long run, however, the effectiveness of management will determine success. Pehr Gyllenhammar makes a complementary point about the importance of management practices in his paper on the manufacturing industry. To claims that the manufacturing sector is on the decline in an increasingly. Services-based, information society, Gyllenhammar responds that the manufacturing industry is adapting to today’s environment. One of the most influential changes has been the new technologies employed in the automotive sector, including new engineering materials, computer-aided design, robots, and microcomputers.
These new technologies mean that decision making can become decentralized and that small-scale manufacturing can be cost-effective. Another important factor changing the manufacturing industry has been new demands from employees and customers, what Gyllenhammar refers to as the invisible contract between them and the corporation.
In fact, the new technologies have brought about important changes in the way work is organized. Less desirable tasks have been taken over by robots; light, flexible technologies allow workers to organize themselves so that they command the technology instead of vice versa; and new materials-handling mechanisms permit the layout of equipment to fit particular work organizations. The challenge for managers lies in organizing production so that they can develop their workers through both technical and leadership training.
To accomplish this goal, it will be necessary for the manufacturing industry to take a longer term perspective and use “patient capital” rather than striving for a quick return on investment. Gyllenhammar concludes that a viable manufacturing industry is necessary but not sufficient to solve the problems of unemployment and slow growth. The manufacturing industry is also the subject of the paper by Emilio Carrillo Gamboa; however, he discusses the issue of production sharing as both a result and a means of globalizing industry. By moving production facilities abroad to low-wage developing countries, firms manufacturing products that have entered the downside of the product cycle can maintain a competitive cost advantage. Mexico, in particular, has become an important production-sharing partner for the United States because of proximity, demographic factors, and the Mexican economic crisis which has resulted in lower wage levels that are competitive with labor costs in the developing countries of Asia and government programs that support production-sharing. The maquiladoras, or production sharing sites, have been the subject of debate in Mexico for a number of reasons: the benefits of foreign-owned assembly services are not extended to the rest of the economy, the maquiladoras do not absorb traditional unemployment, and they are too vulnerable to swings in the U.S.
In addition, some of the plants have been criticized for their poor working conditions. Nevertheless, the author contends that they are an important source of income, employment, and foreign exchange, and proposes that the production sharing offers significant economic opportunities if the competitive advantages of Mexico as a production-sharing site are improved and assembly activities are more closely linked with the domestic economy. Carrillo Gamboa acknowledges the objections to offshore production sharing but suggests that its economic and political advantages far outweigh the disadvantages. Further discussion of specific regional issues concerning technology’s impact on development is provided in papers by Jan Kolm (Pacific Rim), Enrique Martin del Campo (Latin America), and Ralph Landau and Nathan Rosenberg (United States). In his paper on the consequences of globalizing industry in the Pacific Rim, Kolm uses a theoretical construct based on the technological complexity of goods and the product cycle to describe some general trends in the region’s economic development. For example, gross national product (GNP) has increased rapidly due to the globalization of industry, and export-driven economies have helped the Pacific Rim nations overcome the disadvantages of scale and the shortage of foreign exchange.
Kolm asserts that progress in the region is likely to continue, considering that there are suitable gradations of development, ample raw materials in the region as a whole, and a populace that has demonstrated its ability to cope with technological change. The focus of the paper then narrows to an examination of the problems and challenges facing the major groupings of Pacific Rim countries: the Association of Southeast Asian Nations (ASEAN); the newly industrializing countries, in particular, the Republic of Korea; Australia; and the United States and Japan. Despite their diversity and the impediments they have faced in their industrialization, Kolm contends that technology transfer has been less problematic in the Pacific Rim than in other countries of the world, a sign of hope that competition can coexist with cooperation. Enrique Martin del Campo deals specifically with the influence of technology on development in the Latin American and Caribbean countries. Shifts in economic strength and investment patterns influence the developing countries and make it imperative for them to develop strategies for growth through improved technological and entrepreneurial activity. Martin del Campo suggests that the region’s technology strategy must combine development of both advanced and intermediate technologies, linkage of smaller and large enterprises, and diffusion of technological development through many sectors. Because the economies of the region, like most developing countries, participate in the international sphere through foreign trade, competitiveness in foreign markets is crucial.
The rate of innovation, the ability to apply advanced technology, the degree of capital investment, use of natural resources, and the existence of technological support services all affect the competitiveness of Latin America in foreign markets. Two major factors, however, hamper economic growth in Latin America. First, investment is curbed by an economically depressed environment, and second, global demand for the region’s traditional exports is weak. Any plan to remedy these problems would require a strong technological component, including development of local capabilities in technology, internal and external transfer of technology, strategic projects that integrate science and technology, and government policies that support scientific and technological endeavors. Ralph Landau and Nathan Rosenberg review the impact of technological change on U.S. Economic growth.
They cite several key influences on such growth, including technological innovation, high capital investment rates, and increased training of the total work force. The authors conclude that U.S. Economic policies are not conducive to innovation and capital formation, and they propose strategies to ensure continued economic growth. One change that poses both opportunities and difficulties is the rapid diffusion of technology to other countries.
As a result, the exploitation of new technologies is no longer an exclusive strength of the United States. The maintenance of a high-wage economy will depend on the ability of U.S. Firms to compete in international markets, particularly in manufacturing because of that sector’s contribution to GNP, foreign trade, and national security; its purchases of services; and its productivity increases and consequent contribution to the overall economy. Landau and Rosenberg also focus on the role of government in creating a favorable environment for business decision making. Policies that encourage personal savings from which investments could be made, reduce the budget and trade deficits, and support a long-term financial climate are essential. However, because U.S. Business interests and government do not work as closely as they do in some other countries, Japan, for example, this goal may be difficult to achieve.
If the United States is to remain competitive, increases in productivity must be sustained, and this will happen only if training, management, and investment in manufacturing and services are part of public and private strategies. In the volume’s final paper, Hajime Karatsu reminds us of some fundamental points about the role of technology in improving the quality of life. Technology is instrumental to economic growth, and as a result, economic strength is no longer a function of a nation’s size and population, as it was before the industrial revolution.
Although some will argue that technology is the cause of the problems resulting from industrialization, Karatsu describes how technology has been used to provide solutions to some crucial problems—the oil crisis and pollution—in his own country, Japan. Although not explored in his paper, one issue Karatsu’s point raises is the extent to which technological decisions operate in concert with other strategic policies. For example, Japan’s pollution problem, and that of many other industrialized countries, has been solved in part by the export of the pollution-causing industries to other nations. Karatsu supports his views on the importance of technology to economic growth by commenting that Japan’s methods of applying technologies have allowed it to achieve a 1986 GNP of $2.3 trillion, or 11 percent of the world’s economic activity.
One characteristic of Japanese methodology is that new, advanced technologies are applied in practical and simple ways that can be easily commercialized. He cites as an example the use of carbon fiber in. Golf clubs and fishing rods. This practice contrasts with that of the United States, where advanced technologies are frequently applied to complex products in the defense industry. A second aspect of Japanese practices in commercializing new technologies is their attention to incremental changes and improvements in product and process. Karatsu concludes by stressing the importance of technological cooperation so that standards of living can be improved worldwide.
The papers in this volume reflect a diversity of national perspectives on the impact of cutting-edge technologies on the individual, industry, and society; appropriate means for harnessing technology to facilitate economic growth for all nations; and the roles that should be played by institutions and governments in the emerging global economy. Nevertheless, agreement on several key issues is apparent: First, technology will continue to fuel economic growth and rising standards of living around the world. Indeed, technology’s influence is pervasive, for it shapes trade patterns and policies, employment, and even relations among nations. A second area of consensus centers on the important role to be played by the engineering community in facilitating international technological advancement. As mentioned by Stephen Bechtel in his introduction of the keynote speaker at the convocation, “we (engineers and technologists) can only benefit by being more attuned to the factors that influence each country’s technological interests and capacities.” Although this process is frequently constrained by national competitiveness concerns, Bechtel asserts that it is only through increased cooperation that nations remain competitive. “A nation’s strength as a participant in the world economy is derived in part from its ability to adjust to rapidly fluctuating economic conditions and technological change. Cooperation provides access to regional and national trends in technology, thereby benefiting individual nations as well as the international engineering endeavor.” Indeed, industrial competition can be a source of creative tension for the world economy when viewed within the larger global framework of cooperation directed at improving the quality of life for all.
The technological revolution has reached around the world, with important consequences for business, government, and the labor market. Computer-aided design, telecommunications, and other developments are allowing small players to compete with traditional giants in manufacturing and other fields. In this volume, 16 engineering and industrial experts representing eight countries discuss the growth of technological advances and their impact on specific industries and regions of the world. From various perspectives, these distinguished commentators describe the practical aspects of technology's reach into business and trade. Contents.
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197–202. 203–216. Welcome to OpenBook!
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Research & Technology. RALPH E. GOMORY HAROLD T. SHAPIRO Globalization: Causes and Effects Globalization traces its roots to at least the late 1980s. At that time, new countries were entering into manufacturing, which was in some sense the weakest link in the U.S. Chain of science, development, manufacturing, and sale of goods and services. In the case of Japan, lower wages initially made it possible to exploit this relative U.S.
But Japan rapidly developed a number of other advantages based on improved manufacturing methods. Falling costs of sea transport, coupled with a general lowering of tariff barriers, then made it possible for the Japanese to address a global market, including the U.S. There seems to be little basis for the idea that there is a shortage of U.S. Citizens who are interested in science, and that this shortage can be remedied by better K-12 instruction. This process has since been repeated over and over again. Singapore took over the production of disc drives, while semiconductor manufacturing moved to various Far Eastern countries. Flat panel displays, a derivative of the same semiconductor processes, never even reached production status in the United States, despite U.S.
Technical contributions, but started in Japan and then moved farther west. Scientific leadership Such developments help illustrate the fact that scientific leadership does not automatically translate into product or industrial leadership and the resultant economic dividends–a fact that has become increasingly obvious over the intervening years. In addition, with the rapid globalization of science itself (more than 40 percent of scientific Ph.D. Students trained in the United States are now foreign nationals, roughly half of whom return to their countries of origin), the once undisputed U.S. Scientific lead, whether relevant to product lead or not, is diminishing. The competition of foreign students for positions in U.S. Graduate schools has also contributed to making scientific training relatively unattractive to U.S.
Students, because the rapidly increasing supply of students has diminished the relative rewards of this career path. For the best and brightest from low-income countries, a position as a research assistant in the United States is attractive, whereas the best and brightest U.S.
Students might now see better options in other fields. Science and engineering careers, to the extent that they are opening up to foreign competition (whether imported or available through better communication), also seem to be becoming relatively less attractive to U.S. Students (see “Attracting the Best and the Brightest,” ). With respect to the role of universities in the innovation process, the speculative boom of the 1990s (which, among other things, made it possible to convert scientific findings into cash rather quickly) was largely unexpected. The boom brought universities and their faculties into much closer contact with private markets as they tried to gain as much of the economic dividends from their discoveries as possible. For a while, the path between discoveries in basic science and new flows of hard cash was considerably shortened. But during the next few decades, this path likely will revert toward its more traditional length and reestablish, in a healthy way, the more traditional (and more independent) relationship between the basic research done at universities and those entities that translate ideas into products and services.
In the intervening years, another new force also greatly facilitated globalization: the rapid growth of the Internet and cheap wide-bandwidth international communication. Today, complex design activities can take place in locations quite removed from manufacturing, other business functions, and the consumer.
Indeed, there is now ample opportunity for real-time communication between business functions that are quite independent of their specific locations. For example, software development, with all its changes and complications, can to a considerable extent be done overseas for a U.S. Foreign call centers can respond instantly to questions from thousands of miles away. The result is that low-wage workers in the Far East and in some other countries are coming into ever more direct competition with a much wider spectrum of U.S. Labor: unskilled in the case of call centers; more highly skilled in the case of programmers.
System driven by profits These trends are built into a global free-enterprise system consisting of profit-making companies. A company in California that makes printers cannot afford U.S. Production workers if its competitors are assembling their printers in countries where labor costs are very low. Neither can they field their service calls in Florida if a company in India can perform the same task at a fraction of the cost. The need for profitability automatically drives these jobs abroad. Shortcomings in primary and secondary education are sometimes cited as a factor in the loss of technological jobs in the United States, and perhaps they are. However, there seems to be little basis for the idea that there is a shortage of U.S.
Citizens who are interested in science, and that this shortage can be remedied by better instruction from kindergarten through 12th grade. There are more U.S.
Students entering college with the intent of majoring in science or engineering than the nation could ever use. However, many of them switch out, perhaps opting for more attractive careers. In any case, better education by itself is unlikely to affect the prospects for less skilled U.S. Workers by making them generally more productive.
Even a well-trained U.S. Worker cannot be expected to perform so well as to overcome a 5-to-1 wage ratio when workers abroad are also increasingly well educated. The solution to this challenge to the higher standard of living enjoyed by the U.S. Workforce must include the development of new types of products and processes through which the nation might be able to maintain a distinctive advantage. Perhaps in the very long run many more countries will be able to match U.S. Levels of productivity and income.
We can also ask whether today’s very pronounced globalization is good or bad for the United States as a whole, rather than discussing only its effects on certain labor markets. After all, there is a positive effect from being able to obtain goods and services more cheaply. On this point, economics does not give any simple answer. There is a widely cited argument that if one country becomes more productive in industry A, then there will be a readjustment because of comparative advantage, and a country that lost its former advantage in industry A will become more productive in industry B. But this notion is correct only in a limited sense.
Theory does assert that allowing such an adjustment to take place is better for the whole country than fighting against it through tariffs or protectionism, but does not say that the country will be better off afterward than before. A careful analysis of this complex question can be found in Global Trade and Conflicting National Interests by Ralph E. Gomory and William J.
Baumol (MIT Press, 2000). Globalization clearly is an ever-increasing force. Its consequences for the United States and other countries are not fully understood.
It is driven by the profitability it affords companies and as such, globalization is insensitive to its effects on individual countries. Profit flows into certain pockets, while wages flow into others. Ashes and snow brazil. The effect on a country produced by the wages is usually much greater than that produced by the profits.
Understanding how all this will play out in the future deserves much more analysis than it has received until now. Gomory is president of the Alfred P. Sloan Foundation and a former senior vice president for science and technology at IBM. Shapiro is professor of economics and public affairs and president emeritus of Princeton University.