How globalization & technology threaten national competitiveness?

National competitiveness

National competitiveness means the capacity of one nation to perform better and compete with other nations as a result of that country’s abundant of the resources, human capital, investment level and so on.  It is threatened by globalization and one of its major component – “technology”. So, in this study, I will analyze how globalization and technology threaten national competitiveness.

Competitive advantage means any benefits or gains that can be achieved by a company or country over its competitors. To read more, kindly click on “Comparative advantage vs competitive advantage”

Comparative advantage means a nation’s ability to generate a good or service at a lower opportunity cost than other nations. To read more, kindly click on “Definition and examples of comparative advantage”

Comparative advantage formula is based on the opportunity cost. To read more, kindly click on “How to calculate comparative advantage?”

Absolute advantage means the ability to produce a higher portion of goods and services using the same amount of output. To read more, kindly click on “Absolute advantage: Theory and Examples”.

Globalization

Conceptual fathers of “globalization” are philosophers such as Muray Rohtbard and David Friedman. According to by Friedman, “globalization” is a process comprising substantial integration of markets, nation-states, and technologies. Globalization is a process that is changing very fast. There are three dimensions in globalization. They are,

i. Economic globalization

ii. Political globalization

iii. Cultural globalization.

Let’s see how these dimensions threat the national competitiveness.

1. How economic globalization impact national competitiveness?

Economic globalization means increasing the interdependence among the nations in the world because of trading of goods and services, faster spread of the technology and flow of international capital.

1.1. Faster spread of the technology

Sophisticated technology increases the poverty and income inequality

Technology is always spreading very fast. Countries such as USA, UK and so on have a higher capability of achieve sophisticated technology. But countries such as Gambia, Congo and so on have a lower capability of achieve sophisticated technology. Following table shows the highest and lowest “readiness for frontier technologies indexes”.

So, technology has threatened the national competitiveness of the countries such as Gambia, Congo and so on. Because they have a lower capability to compete with other countries. These countries have higher poverty level. As examples, in the year 2018, 76 percent people in the Congo were felt poverty (World Bank, 2021). But countries that have higher technological capability, most of the times show very lower level of poverty.

Today, technological innovations destroy the jobs of the people. In the past there was a less tendency of losing of jobs of people because of the technology. Because then, it was difficult to teach computers how to perform them. But now because of the machine leaning technology, we can teach computers how they should perform tasks.  Decision making tasks usually needs the human intelligence. Humans make decisions based on their past experience and data availability. As examples we can say financial predictions, future trends and so on. But with the Artificial Intelligence (AI) technology, computers make such kind of predictions. So number of employees in the AI industry is increasing.  AI-related job posts on a worldwide employment-related search engine increased by nearly 100 per cent between June 2015 and June 2018 (UNCTAD, 2021).

But job opportunities relate to traditional roles which do not use the AI have been rapidly decreasing. So, these employees have lost their job security. Then they feel in mental stresses, anxiety and depression. Also, when they lose the jobs, poverty of the country will be increased. Since technology based employees are well paid while traditional employees do not have employment, income disparity of the country will be increased. Because of higher poverty and income disparity, national competitiveness of the country will be decreased.

Environmental pollution.

Technology pollutes land, water, sound and so on. As examples, technological devices which passed effective lifetime pollute the land. Also, some machines are very noisy.

1.2 Trading of goods and services

Countries produce the goods and services which they have higher competitive advantage and export the extra production while importing the goods that they have less competitive advantage to produce. Because of this, economic independence of a country is decreased.  A country has to depend on other countries to consume the good that it has less competitive advantage to produce. This will decrease the national competitiveness of a country. As examples, countries such as Bangladesh, Pakistan, and Sri Lanka and so on have less comparative advantage to produce mobile phones. So, they have to depend on countries such as China, Japan, and USA and so on to consume mobile phones.

2. How political globalization impact national competitiveness?

The globalization of political means the loss of the absolute sovereignty of a country or region, increase the interaction between governments, increase of the external intervention by non-governmental organizations. As examples, in the past UK has controlled many African countries as the colonies. This was a one of the major reasons to have less national competitiveness in African countries.

3. How cultural globalization impact national competitiveness?

Cultural globalization means fast spread of the attitudes, ideas, meanings, values and cultural products from one nation to other nations by crossing national borders. Because of the cultural globalization, there is a risk of losing uniqueness of the cultures. As examples we can say, Malaysia have a very unique and delicious foods such as Laksa, Nasi Lemak, Murtabak and so on. These food culture have created a national competitiveness. Because many people who live all over the world like to taste these foods. So, this is very important for the development of the Malaysian Tourism Industry. But with the globalization, people in the Malaysia have a trend of eating of western foods. This reduces national competitiveness.