How technology is transforming the global economy?

By, Prof.Asoc.Dr.Teuta XHINDI

EDITORIAL

Technology is having profound effects on multiple facets of our societal fabric. The current developments, if we were to take them back in time, might appear to the earlier generations like magic. However, these seemingly magical developments are built upon hundreds of years of generated knowledge along the innovation funnel: invested by states and research centers along the basic research and development, commercialized by the industry and lately advanced by the users themselves as they act as innovators. This is nothing new in and of itself. What is new is the rate of change. According to the techno-optimist Ray Kurzweil, we will experience twenty thousand years of technological change over the next one hundred years. This, often described as an exponential rate of change combined with increasing complexity, makes even more important the need for social scientists of all fields, and economists in particular, to reflect on the changes that are about to occur.

So, how is technology changing the global economy? Digital technologies will significantly reduce trade costs and reshape the composition of trade, favoring services and time-sensitive products. Developing countries will potentially gain a larger share of global trade. International cooperation is essential to harness the benefits of digital trade and promote inclusive economic development.

In terms of the labor markets, news and media have inundated the readers with ominous titles such as “the end of labor”. However, according to state-of-the-art research, it appears that automation has shifted labor demand away from routine  middle-level jobs to non-routine ones, commonly denoted as the routine biased technological change (RBTC). Hence, researchers seem to be more concerned about the “decaying middle” and the quality of jobs, as opposed to the end of labor. Until recently, it was believed that Polyani’s paradox (named after the famous economist Karl Polanyi) could not be surpassed, the simple idea that “you know more than you can tell’’ inferring that not all our tacit knowledge can be fully explicitly articulated and codified.

How to cite: Xhindi, T. (2023). How technology is transforming the global economy? Ingenious, 3(1), 5–6.

https://doi.org/10.58944/bpyu2171