How Significant is Technology in Developing Economies?
Technology has played an enormous role in many areas of life in Western society in recent times and so much so that life just 20 years ago looks completely different to how it does today. Technology plays a pivotal role in today’s world in developed nations, but what about developing and emerging countries where technology is not as prevalent?
The Struggles of Developing Countries
There are many developing countries around the planet that have not benefited from technology in the same way but could benefit massively in the near future. Developing countries are those that are still developing and face many challenges that are no longer seen in developed nations. These can be myriad and vary depending on where you are, but typically developing nations struggle with issues like poverty rates, healthcare, education, crime, economic instability and hunger.
Innovation
Historically, developing nations have chased industrial and manufacturing-driven growth which often does not involve modern technology. One region which is interesting to analyse in terms of developments is south-east Asia. Nations including South Korea, Taiwan, Indonesia and Malaysia all were under Japanese occupation during WWII, but since then certain markets have flourished. South Korea, Taiwan and Singapore have evolved into innovation-driven economies that utilize the latest and best technologies and as a result, now have a GDP per capita on par with developed Western nations.
What Makes Economies Grow?
So, what is it that makes some economies grow faster than others? GDP per capita is an indicator of productivity rate and this is calculated with labour, capital and total factor productivity (TFP) statistics. TFP represents efficiency and technology, so it is clear that tech plays a major role in economic development and is a major reason why nations like Singapore and South Korea have grown significantly and are now amongst the richest nations in the world.
Challenges
You must factor in the challenges that developing nations have as it is a difficult situation to overcome. Low GDP and lack of capital and foreign direct investment are often major factors which can hold a country back, which is then made worse through issues like political instability and sabotage, civil unrest and crime. Those in Latin America, Africa, Asia and the Middle East all see crime and corruption as the greatest problems in their nations according to the Pew Research Centre. Fundamental socio-cultural issues like these will only deter foreign investors so it is a vicious cycle that these developing nations find themselves in.
Tech Development
While it is not a full solution, basic technological development in these areas can facilitate growth including infrastructure, manufacturing, education etc. As seen in countries such as Singapore and South Korea, technology has the potential to fast-track economies to become significant global players and create opportunities for significant profit in foreign exchange markets.
Technology is everywhere in Western society and deeply engrained in modern life. This is not the case in developing nations around the world and there are a myriad of factors as to why these nations are not as developed, including the lack of technological influence which is such an important factor when it comes to growth and GDP. But, technology is likely to be the key to freeing developing economies and supporting rapid economic expansion.
