How is Information Technology Connected with Globalization?

The papermaking process took a millennium to go from China to Europe. As the globe has gotten more interconnected, new ideas have greater opportunities to propagate.

The growth of technology is a major factor in the rise of living standards and wages. However, progress in both knowledge and technology does not always occur simultaneously or even globally. That being said, the manner in which technology is transferred from one country to another is crucial to the creation and distribution of global development.

A number of other big nations have recently joined the top five leaders in a variety of categories, having made important contributions to the world’s reservoir of knowledge. Among them are China and Korea. This means that these groups will contribute significantly to technological advancement in the future, but during the time under consideration, the G5 formed the majority of the technological front.

Knowledge flows are tracked by looking at how often patent applications from different nations make reference to the work of established innovators. The following graphic illustrates these international bridges of understanding. There are essentially two main characteristics. To begin, whereas the United States, Europe, and Japan dominated worldwide patent citations in 1995, China and Korea (shown collectively as “other Asia”) have made increasingly extensive use of the global knowledge supply as indicated by their citations.

Second, both intra-regional (shown by the red arrows) and inter-regional (indicated by the blue arrows) knowledge ties have become stronger over time. The research also considers the intensity of international commerce with technology leaders as a proxy for the availability of foreign knowledge for domestic usage.

Technology Advances Thanks to Globalization

One of globalization’s key advantages is the increasing flow of information throughout the world. Despite concerns about its potential drawbacks, our research demonstrates that globalization has accelerated the cross-border dissemination of technology in two distinct ways.

To begin, globalization facilitates domestic access to a wider range of international expertise. Second, it boosts international competitiveness, especially as a consequence of the growth of enterprises in developing markets, which in turn increases the incentives for businesses to innovate and embrace technology from other countries.

In particular, the effect has been good for developing market economies, which have been making more use of foreign knowledge and technology to increase their innovation capacity and labor productivity development.

Growing participation in global supply chains with multinational companies has been a driving force behind the development of innovation capacity in emerging market economies. However, not all firms have benefited from this trend, as multinationals often reallocate some innovation activity to other parts of the global value chain.

The current slowdown in innovation at the technological frontier has been mitigated in part by the greater transfer of knowledge and technology to emerging market countries, which has contributed to the income convergence of many such nations. Alternatively, the slowdown in cutting-edge technology has had a greater impact on developed countries.

The research concludes that innovators in the same field may learn from one another’s progress. This means that in the future, with China and Korea making more significant contributions to the advancement of the technological frontier, there may be room for beneficial spillovers from these new innovators to established innovators. There is no one-way street for the dissemination of information and technological advancements.

Training a Wider Population

One of globalization’s main advantages is that it promotes the dissemination of information and expertise, which in turn boosts economic development in all nations. However, connectivity alone is not sufficient. Science and engineering expertise is often necessary for the absorption of foreign information and the ability to build upon it.

To improve the ability to effectively absorb and use foreign information, it is necessary to invest in education, human capital, and domestic research and development. To keep inventors’ capacity to recoup expenses and guarantee that the new knowledge promotes global progress, an adequate level of protection and respect of intellectual property rights is necessary on a global and national scale.

It is the responsibility of policymakers to ensure that the positive growth benefits of globalization and technological innovation are widely shared across the population. This includes preventing innovative firms from abusing their monopoly position in the market by misusing their cutting-edge technology.