Emergence of European Union (EU) and North American Free Trade Agreement (NAFTA) clearly indicates the emergence of economic interdependence. Ohmae (1995) argues, “ Today global economy is borderless. Information, capital and innovation flow over the worlds at top speed, enabled by technology and fuelled by consumers desire for access to the best and least expensive products”. Today we can see people wearing a Nike shoes, Lacoste shirt and a Ray Ban Aviator sunglasses all around the world.(). Large multinational corporations and increase in productivity due to technology has made this globalised sight possible. New communication and distribution technologies and the removal of trade and investment barriers have created truly global markets with global competition for goods, services and capital. Dictionary definition of globalisation also describes it as “a process affecting the production and development of any material worth”, which further explains its relation with production.
IMPACT OF INFORMATION TECHNOLOGY ON GLOBAL ECONOMY
“---there is one economy, all of it being transformed by information technology. What is happening in no dot.com fad that will come and go-it is profound economic revolution”.(). Importance of information technologies on global economy can be clearly seen in Blair’s speech. Technology has been a fundamental force in shaping the patterns of transformation of economy.(). Today in this turbulent and dynamic business environment, organisations, which are competing in global markets, have to continuously change their method of doing business. In trying to improve the performance the focus has shifted to the use of Information technologies.().Information technology is not new in itself. But with the convergence of communication and computer technologies and a shift from analogue to digital system is so important for development in the global economy.(). Technologies like Internet and e commerce has been phenomenal in economic growth. Internet, originated at US Defence Department Advanced Research Projects Agency (ARPA) to keep track of data through computer, is no longer simply used for research or play or exchanging messages. Today Internet is being used to have an access to data, sale of data, privacy, copyright, affordability of government information and service, training of staff and the public.(). If time is indeed money, then Internet provides rapid access to information necessary for decision-making. (). John Putzier, President FirstepInc says “If you are not impacted by technology in your job, then you don’t have a job”.(). Internet has allowed consumers access to global marketplace from the convenience of their homes and offices, twenty-four hours a day. (). E-commerce, which includes online credit card transactions, e-cash, e billing, e-cheques, electronic invoices, purchase order and financial statements has transformed the business practices through B2C (business to consumer) and B2B (business to business) commerce. Consumers have gained more powerful and efficient purchasing in the electronic marketplace through B2C e commerce. Sharing of information between consumers has resulted in new products and improved services. Global price competition has resulted in lower prices for buyers. But the real effect of e commerce in globalisation has been through B2B e commerce, which accounts for more than 80% of electronic commerce in the world today. It is helping many companies to buy their products and services or sell them products and services. Gartner (2001) predicts that only B2B e commerce will total $8.5 trillion in 2005. ().`
IMPACT OF INFORMATION TECHNOLOGIES ON FINANCIAL SECTOR:
Financial markets cover a wide range of institutions and practices through which lenders and borrowers are able to interact. Lenders include banks and other financial institutions that gives loans to individuals and institutions.() As this sector deals with information and data that are easily digitalized, thus is one of the industries which is under heavy influence of information technology.(). Technology has fundamentally changed the landscape of the global financial market. Advance in telecommunication and information processing has offered financial institutions the capability in handling vast amount of data at very high speed and at relatively low cost. Rise of IT is creating an increasingly round the clock borderless global trading network. It has entirely changed the way money flows by providing greater mobility and flexibility in capital and financial movements. Warf and Purcell (2001) have rightly described the phenomenon, “Travelling at the speed of light, as nothing but zeroes and ones, global money dances through the world’s fibre optic network in astonishing volumes. National boundaries little in this context: it is much easier to move 41 billion from London to New York than a truckload of grapes from California to Nevada”. (Warf, Purcell) The explosive growth in Internet usage has made it an ideal means to conduct commerce. Central banks worldwide are considering their positions with regard to electronic commerce, Internet banking and electrical money application.() Internet with its characteristics of speedy, low cost and broad communication has drastically improved the way financial transactions are done. OFS (Online Financial Service) has helped banks to reduce their transactions cost along with providing better customer service. According to estimation from The American Banking Association, an OFS transaction costs $.01 in comparison to $.54 for a telephone transaction and $1.07 for a branch transaction. By eliminating the limitation of time and distance, electronic financial transaction has made cross boarder transactions easier and thus made it possible to provide services to customers on a global scale. These technologies have helped financial institutions to target international customers and respond immediately to any change in exchange rates in international currency markets. (). Today even small investors are gaining access to real time market information which have until recent years been largely accessible by financial institutions. Traditionally small and decentralised service providers are being linked nationally and globally through the use of communication technology. Technology has levelled the play field for all investors around the world.
IMPACT OF INFORMATION TECHNOLOGIES ON MNC
Apart from the global finance the commonest image of the economic globalisation is the multinational corporations (). As two third of the world trade is being done by the MNC's, their operations are central to the development of economic globalisation (trans). Multinational corporations are a vivid example of globalisation. Backed by their respective governments and international financial organisations such, as IMF and WTO, they are the key agents of global economy. (). Their huge capital demands and large cash surplus have made them key players in world economy. (). Many authors believe that() the main cause for growth of MNC and thus globalisation is technological innovations. Information technology has helped MNC in slicing up the value chain, by allowing them to divide production facilities around the globe, which was previously concentrated in one country.(). This trend has fuelled the process of globalisation. Today transnational production outweighs exports as the dominant mode of servicing foreign market.(). Technology like video conferencing has made it possible for managers in different countries to organise a successful meeting with no ambiguity, which was not possible before (). Advances in technology have allowed MNC’s to expand to potentially new markets to gain competitive markets. ().
IMPACT OF INFORMATION TECHNOLOGIES ON PRODUCTION
In last few decades, new technologies have played a significant role in production of various goods at global scale. Information technologies have helped reducing the hours of work required per unit of output and a broad expansion of newer products. (). Recent studies by the Bureau of Labour Statistics have proved that IT spending has a significant positive effect on firm productivity by boosting the labour productivity and the return on investment. (). Computer aided design and computer controlled equipments have helped organisations in faster production cycles, flexible machinery, short production runs, highly skilled staff and improved integration with suppliers and customers. Today information technology has become the main commodity and source of productivity and not only a means of achieving better way of doing things in the production process. (). It has affected techniques of production, scale of production and location of production. (). Increase in the productivity has resulted in the fall of prices and improvement in quality (www.hicss.hawaii.edu/HICSS_34/PDFs/OSSCI03.pdf)
CONCLUSION
Technology has most definitely changed the Marshall McLuhan’s famous term to ‘global e village’. Although technology has been playing a significant role in the strengthening of globalisation since the invention of steam engine, this is the development of information technology that has really intensified it. Today world and global economy are under heavy influence of technology. Financial sectors, multinational corporations and production facilities are the sectors, which have really benefited. It has transformed the business and functional strategies of financial institutions like banks and investment companies, by giving them an opportunity to target international customers while not loosing their focus on local ones. Without these technologies it was not possible for large multinational corporations to start and manage their subsidiaries all around the world. Information technology’s part can be also seen in the productivity by reducing processing time and complexity. With the substitution to human labour it has revolutionized the production organism. (). In fact this is information technology that has made the notion of economic globalisation and a single global economy possible.