The world economy has strongly affected by technology. It has improved living standards as well as operations and also reduces the amount of doing business.
By : Umair Aziz Memon, Muhammad Basit Hasan and Ramsha Ashfaq
An Overview on Science & Technology:
In 2000’s, technological development started and constantly it evolved since the start of history of mankind and in past years technological advances has increased with incredible speed. Today, technological innovation is a viral factor of effectiveness and nation progress. In global economy, the main reason in difference in economic growth is due to the technological differences. The main focus of technological innovation is on the technological attributes of a product or service. Therefore, innovation is an important factor of economic transition as it can lead to higher productivity. Likewise, as productivity increases, more good and services are produced which helps to grow the economy. New technological innovations lead to greater output with same input. Most economists also agree that technological innovation is important for economic growth.
Global Adaptation on Technological Innovation:
The world economy has strongly affected by technology. It has improved living standards as well as operations and also reduces the amount of doing business. Many advances such as innovation in the inventory system is so effective that parts can be supplied for assembling in very less time. Moreover, advancements and innovations are made in telecommunication which has boosted the economic growth by generating employment opportunities.
There are many countries around the globe that have contributed in the technology and bring innovation in different sectors. Germany is one of the top countries in 2020 ranked on 1st as per the most innovative economies. Germany come up with the technological innovation and introduces robots. Their main purpose was to develop a robot that is intuitive and simple. They wanted to make a robot which can adapt the changes and learn from humans so that it can do several task rather than following a specific computer program task. This technological innovation enhanced the productivity with efficiency. Moreover, Germany also introduced the first autonomous driving, a driverless car. It was another technological innovation which gave a boost to its economy.
Similarly, China is also one of the leading countries in technological innovation. China has officially started working on research and development for 6G mobile networks. While for some countries 5G networks is still on its early stages and there are countries who are still on 4G. Therefore, at this point of time China to start working on 6G is another technological advancement.
South Korea is the most innovative nation of the world. South Korea is ranked on 2nd as per the top innovative countries in the world because of its R&D intensity. There are huge numbers of researchers who are working to bring innovation. Due to the high R&D intensity South Korea is a global leader in information and communication technologies.
Current Status of Pakistan:
Science and technology are the new norms in making life easier. The developing countries are now focusing on science and technology to overcome the poverty level and boost economy through innovation in technology. As the world is moving towards urbanization, science and technology can be the engine to enhance the economy of underdeveloped countries.
Pakistan being one of the agricultural based economies has now put its steps into revolutionizing technology and has started focusing on the innovations. For instance, ventilators are being manufactured and exported. Adapting to the new world ideas and inviting businesses to invest in technological part of the country is what the current government is trying to do. For instance, the addition of KIA Motors to the dominant existing trio in automobile sector can be witnessed that automobile industry is the sector where opportunities are available in Pakistan for automobile companies to invest.
Pakistan’s Interest in Science & Technology:
Information Technology (IT) and Telecommunication sector is growing rapidly in Pakistan creating great opportunities for the youth. Pakistan’s 60% of population lies between 15 – 30 years, talented young fellows with some great skills are the gold for Pakistan and can contribute handsomely in growing Pakistan’s economy. Pakistan’s Foreign Direct Investment (FDI) in Information Technology and Telecommunication was witnessed to be 622.5 million USD, yet it has the potential to expand as the talent lies in Pakistan is enormous.
The main goal for current government is Technological and Digital advancement which can be witnessed by constructing country’s first Science and Technology Park. Likewise, Google and IT Ministry has joined hands in providing education to the children aged 9 – 15 and teach coding along with other IT skills through the ‘CS First Program’ in Pakistan.
Moreover, with the latest reports, Samsung is planning to set up its assembling plant in Pakistan. The digital transformation is growing rapidly which also contributes to the GDP of Pakistan and can be expected more in coming years.
Comparison of “Development Expenditure” between Pakistan, India & Bangladesh:
Pakistan is a neighbor of India and Bangladesh was a part of Pakistan before 1971, these three countries are key stakeholders in the South Asia, In respect of Science and technology, Bangladesh is on the fastest track of development with the budget of USD 2,050 Million which is 97% of total budget of USD 2,116 for the Ministry of Science and Technology year 2020-2021, the development expenditure ratio was 97% in the budget year 2019-2020 and 96% in the year 2018-2019, It shows that Bangladesh is consistently focusing on development of Science and Technology during the past three years.
India is considered as a big giant in Science and technology but the development budget for the year 2020-2021 is 51% with USD 427 Million out of total Science and technology budget of USD 841 Million. However, in the year 2019-2020, 47% with USD 347 Million out of total and 45% with USD 298 Million were allocated which indicates that India is increasing its strategic investment on Science and technology to grow its economical domination.
The development budget of Pakistan’s science and technology is 32% with USD 26.4 Million out of total budget of USD 84 Million in the budget year of 2020-2021, According to the past trend, 47% with USD 43.9 Million in the budget year 2019-2020 and the same were allocated in the year 2018-2019 which clearly demonstrate that Pakistan has reduced its development budget with 15% in the year 2020-2021.
Challenges in Adopting Science & Technology:
Adapting to new technologies isn’t a piece of cake for Pakistan. The developed countries innovating science and technology are backed by their resources, skills both technical and managerial, and heavy markets. The major constraint for Pakistan is its Policies, Financial Standings, Resources, Global Image, Power Shortage, & Skilled Labor force.
One of the most debatable points for economist is unemployment due to technological advancement.
Some economists believe that with adapting to automation, the production will increase and so the prices of goods will go down, and as the demand will increase, the capacity for production will also be enhanced so new opportunities will grow.
Technological change demands different skills, so the nature of the job is different, because of which, unemployment can be increased for a certain period until the labor becomes advanced with the required skills.
When production is switched from labor-serving to automation, some labor can lose their jobs, however, productivity of machine increases. Technological change can create some percentage of unemployment, but at the same time, new opportunities are created. A machine can produce more number of goods and in an efficient manner than the labor.
Advisory Note:
Pakistan is becoming an emerged economy with rapid expanding links around the globe; it’s paramount for Pakistan to focus on development expenditures & project of Science and Technology with sound investment. There is a lot of opportunity in Pakistan in terms of Technology but Pakistan need to invest on education with latest educational structure, training, R&D events & IT infrastructure. Pakistan should also think about strategic partnership and participation on broader scale with world leading technological advanced countries. Pakistan must contemplate and design framework to tackle the ethical, Political, security, economic and human rights risk connected with technology advancement. Pakistan has to alive the spirit of cooperation and innovation.
For achieving long lasting Science technology and innovation development goal, an action plan and dedicated department must be determined, who consistently have eyes on the activity of world regarding technology advancement and extend the linkage with such innovating countries.
Additional Information:
Federal Budget – Finance Division of Pakistan (www.finance.govt.pk)
Union Budget – Finance Division of India (www.indiabudget.gov.in)
Federal Budget – Finance Division of Bangladesh (www.mof.gov.bd)
Notes
Umair Aziz Memon, Muhammad Basit Hasan and Ramsha Ashfaq prepared this article under the supervision of Muhammad Mansoor Isani for the purpose of class discussion and knowledge based learning under the course of Business Economics at Institute of Business Management, Karachi.