Economic Geography Paper on Digital Economies

With high season back in Silicon Valley and activity is rising with rents soaring as well as demand for vacation destinations and holiday homes to show that wealth is collected. The article states that other people think Silicon Valley has stagnated with staggering rates of innovation. Others suspect that the world strongest economy might is stuck in a static state. Growing concern state that the economic impact of changes cannot compare to those of the past. The growth in the numbers of people taking part in development and research presents a contradicting picture with the less creative economy. This paper argues that the rate of progress has seemed to slow compared to that of previous years. Inventions with cheap processing power are on the rise as computers learn more of social skills pointing to the technology-led growth either advancing or declining (Economist 1). Despite new government regulations assisting in environmental protection have been introduced, their economic impacts have not been met since they are not in the G.D.P, the issue might not be the slow pace of inventions, but those available institutions have become too rigid for innovation that is truly revolutionary (Economist 3)

Since it appears that machines can do most of the things human beings can do, there comes the question of whether a man will be able to keep his/her job and whether both skilled and non-skilled jobs are vulnerable to the machine era. This paper explains that digital economies will help the economies develop faster, but not everyone will reap the benefits. Digitalization is creating more and more disruptions because as computers get more advanced employment opportunities for some kinds of workers decrease. To others, on the other hand, technology has enabled copartnership between employees and machines, and its advantageous to possess technological skill (Economist 2).

Demand for low-skilled labor has declined while that of high-skilled labor has risen. Meanwhile, some the most significant innovations have not been around long enough for their effects to be felt. As machines keep advancing the middle class also disappears, and if technology advances past the second and third stages, the third class might decline with growth experienced at the extreme ends. Technologies continue to progress rapidly but faced with the decline of business dynamism. Entrepreneurs still look for means of applying both technology and human innovativeness as a combination. Focus, therefore, should be made in fields such as education, infrastructure, entrepreneurship, immigration and research since innovation will usher the world into an era of abundant wealth with the least toil and work done (Harvard business review 68).

The evidence presented shows that innovation is declining with investors and engineers saying that innovation is somewhere between lifeless and dead. Shared across other fields is the same feeling of disappointment. Intensive growth is powered by the discovery of advanced ways of utilizing workers and resources. Emerging markets, on the other hand, can still manage fast growth and will continue for longer because they are catching up to technologies that have been used before. Developed countries have no such drive to help it progress. Two centuries of economic growth can compare to just one big wave of dramatic change and not the purported new era of continuous advancement. The most important discoveries all have been made and despite any other innovation that might come by there will be nothing that will change the manner in which the world operates (Harvard business review 70).

Based on how much invention is currently going on in the world today there is a rise in the number of people doing research and a lot is spent on these studies yet in America the rate of total factor productivity has declined. As concepts accumulate, it becomes tough for innovators to catch up to their area of specialty in the respective fields. It takes a time to learn new concepts long enough to put them into practice and generate innovative ideas.

The rate of advancement to have witnessed a staggering decline compared to that of the early and mid-20th century. For instance with the improvement of speed in the transport sector very little has advanced since the last important discoveries (Economist 6).

Despite the fact that medical advancement is at its prime, life expectancy still has declined. Despite the large fund spent in research, there still have not been any breakthroughs yet in curing of cancer, stroke and heart disease. The world has had a lot to offer and the fact that it can no longer provide can be very disappointing as is. Communication, however, has seen huge advancement but its effect cannot be felt in figures (Economist 5).

To fully exploit a technology requires time and economic growth requires technology and not innovation. The effect of change is known years later. Computers too are getting closer and closer to understanding human language and emotion and may soon find their way into the business world. Technology improving could lead to a scourge of technological unemployment in its path. New technology has contributed to static income and a reduction in opportunities that require moderate skill levels. Progress cold still poses a threat to higher level jobs (Economist 5).

Conclusion

As long as there are profits gained from new discoveries like ideas and knowledge, there is an incentive for the production of technology. Long-run growth in productivity requires a change in technology to overcome the constraint of diminishing returns. Since innovation is the introduction of new knowledge to the economy and a slowdown in this process can have dire consequences on the economy, its continuous progress is required for the technology to advance.

A slowdown in innovation will result in higher requirements for labor specialized within the existing technological boundaries. This is bound to stagnate growth because, with no attention paid to new ideas, funds to research in innovations that enable growth can diminish. Employees with the highest accumulation of knowledge prefer to one who comes up with new ideas that have no proof. Because rationally, private investors prefer models business models that operate after a reasonable time to profit and cash out hence much thought into innovation (Harvard business review 73).

Jobs that require moderate levels of skill face a stagnant situation due to new technologies, and deeper progress can threaten jobs advanced high up the ladder and down the power spectrum. Computers are proving to be able to learn faster than human beings and if technology continues it might become easier to teach a machine a new skill than to show a person but overemphasis on the current technology might just lead the world there. Innovation in this age has slowed down due to the humongous welfare gains from technological productivity. Thus new institutions that should lead innovation have become too uptight to accept new ideas (Economist 11).

References

Harvard Business Review, June, 2015. The great decoupling.

Economist, January 12, 2013. Has the ideas machine broken down?