Information Technology and the Economy

There are three fundamental changes that the world economy is now facing. First, tariff and non-tariff barriers are falling down under the WTO regime. Second, business activities are being globalized. As a result, cross-border investments are actively taking place. And then, as trade and overseas investment increase, one nation's economic policies and conditions greatly affect those of the other nations.

In such a global economy, information technology plays a more important role than labour and capital do. Microeconomic globalization is a phase at which companies are establishing a global mechanism of production and marketing by means of the computer and communication. Macroeconomic globalization is closely related to global diffusion of information.

Information technology has shifted the paradigm of the economy. In a macroeconomic sense, information technology affects the patterns of production, investment and employment. In a microeconomic sense, information technology changes business activities. In other words, thanks to advanced information technology, knowledge-based workers, who create and utilize information, play a key role in economic activities.

In addition to yields and value added, it becomes important how much information can be converted into useful knowledge. Knowledge itself, not a physical good, will be a valuable product. So, we can easily infer that knowledge-creating organizations like research institutes and universities, will find their increased roles as a place for economic activities.

1. Information technology and macroeconomic changes

Most of all, let us take a look at the macroeconomic changes that information technology has brought about.

(a) Changes in production structure. As the information technology evolves, the world is now in paradigm shift from the industrial age to the information age. As a result, there is a growing demand in the service fields that require expert knowledge and information.

Thanks to information technology, existing service industries such as banking and distribution are enhancing efficiency and expanding their business areas. New industries on the basis of information technology such as software industry and information processing service are rapidly growing.

(b) Changes in investment structure. As information technology changes the aspects of competition, investment is made more in the area of information and communications that promotes productivity and expedites decision-making process than in the facilities increasing the production capabilities.

(c) Changes in employment structure. The number of workers in manufacturing sector is drastically reduced by shrinking share of its production. But employment in information and knowledge-intensive service sector is increasing with automation and investment in information technology. In the occupational categories, there are more demands for experts with creativity and information technology.

2. Information technology and microeconomic changes

Information technology has great influence on business activities. Changes take place in every part of the business; development of goods and technology, procurement, production, sales, distribution, and post-sale services. Enterprises lay great importance on rapid development of diverse goods and technology in order to satisfy customers. Time to market is also getting an important factor in this economic environment.

Meanwhile, enterprises change production system from mass production under economy of scale into production on demand. In competition with large companies to increase the market share, venture companies are successfully deploying "maximization of profits" strategy.

Дата добавления: 2015-10-30