The history of mankind has been characterized by many revolutions which just but to mention include agricultural, industrial and of late information technology revolution. All these revolutions targeted to improve the efficiency of delivery of services to the people and the economy at large. While all these revolutions have been yielding benefits that are visible to every one, the benefits of information technology have superseded those of the other revolutions by a great magnitude.
Across the world, everyone is reaping the benefits in one way or the other. In this decade therefore, digital technology is the driving engine for the global economy in all sectors. Experts and researchers argue that it has been the key in unlocking the decline in productivity that was evident from mid 1970s up to mid 1990s. Information technology has proved beyond reasonable doubts that its benefits are real in the following ways (Antonelli, 2002, p. 16). To begin with, information technology has been crucial in increasing the productivity growth.
Since the introduction of information technology in 1970s, the average output per person has increased many times than that of the past. Due to this, employment opportunities have become more available thus higher revenue generation for both individuals and the government. The trickle down effects of this increased revenue are being felt in better education, health and other essential services that are being provided. It is estimated that labor productivity has been increasing at an average rate of 3.
2% annually since mid 1970s. This is attributed to integration of modern digital technologies that have miraculously reversed the declining productivity to the older industrial production technologies that had reached the point of diminishing returns. Currently, there is a strong agreement among economic experts globally that information technology revolution has been and remains the key driving force behind the current robust upsurge in productivity of goods and services.
Studies that have been carried out in businesses with an integrated use of digital technology in their various operations and those without such technological integration have proved that productivity is incomparably very higher for those that have embraced the use of digital technologies. Following this therefore, all firms are on their heels to ensure information technology is incorporated in their operations with immediate effect or else they become redundant in the very competitive global economy.
The high productivity growth has been attained by using digital technology in provision of self service products like banking, quick processing of information, redesigning procurement and supply chains to make them more efficient, automating and streamlining frequently done tasks and transactions. It has also been used in ensuring that workers avoid uneconomical production methods, making internal operating system of organization efficient and enabling workers to perform many tasks at once thus utilizing time economically (Jacob, 2006, p. 59). The second benefit of information technology is that it promotes growth indirectly.
In addition to increasing productivity, it has been associated with other indirect positive impacts that have significantly assisted organizations to be more efficient in their operations. By using IT, organizations have been able to attain higher economies of scale and expand markets for their services and goods. The revolution of digital technology has led to globalization of markets in service and manufacturing industries. Through use of inexpensive communication systems, logistic systems have become more efficient and also international supply chains have been developed.
This comes in addition to the efficiency in marketing of local products in global market, improvement in chains of supply ,information distribution and cutting cots of communication that gives the organization a chance to restructure the allocation of inputs in an economical way than before. Due to this, businesses have been able to have a specific area of specialization in the global market, avoid sole dependency on local markets and share innovations with others in the world. For the managers, IT has given a wide variety of options from which they can make decisions.
In the current world, product cycles have been shortened, economic conditions are changing suddenly and business competitors have increased. Elsewhere, managers are forced to be quick decision makers so as to cope with such conditions and remain relevant to the goals of their businesses. Information technology has therefore been instrumental in assisting organizations to develop the ability to make such prompt decisions by proving the necessary information at the right time (Pedro, Manuel, 2005, p. 45). Information technology has also been a benefit in that it enables the economy to yield optimally.
IT impacts on the job market and its output in three main ways. Firstly, is by minimizing economic recessions and shortening business cycles. This has been evident in post 1980s economy that has been stable unlike the economy before 1980 which was characterized by often recessions. Secondly, IT has helped in financial inventions where it has enabled the banks to asses the credit worthiness of anticipated borrowers by gathering and sharing information about them. Out of this, the money lenders are able to know who is suitable for getting loans thus avoiding economic downturns.
Thirdly, IT has enabled proper inventory management keeping records of all products and goods in an organization. This Was not possible in the past and what used to happen is that organizations would reduce production so as to get an opportunity to clear the excess inventories by selling them off. This move would reduce sales hence many workers were retrenched resulting to decline in revenue. With the discovery of IT, this phenomena has become a story of the past since all inventories can be kept safely through strong models of information and data technology.
Additionally, as a driver to maximum yielding of the economy, digital technology has led to an increased contribution of the human population towards economic strength, productivity and functionality. Those who have limited work flexibly, elderly and the disabled have a chance to contribute to the labor market. This is through working while at home. As a result therefore, many people have a chance to take care of their families something that was rare in the past especially for the management posts (West, 2001, p. 63).
Moreover, IT has made allocation of services and goods to be more efficient by availing information on the productive trends of the economic resources. It has facilitated the establishment of markets indicators and new markets where they never existed before. This is being done by assessing and analyzing the needs using various market signals in a region and allocating goods and services as per the needs of the society. This strategy has worked well in areas such as transport and energy sector where such information could not be available before. Again, IT has played a key role in expanding the consumer information.
It avails information about prices and quality of products to the potential buyers. This has made hustle free shopping for various products through the internet . In addition it helps in comparing prices hence saving on costs. This is unlike the normal advertisements on various media that does not provide comprehensive information which is normally required by consumers (Smith, Barfield, 1996, p. 76). On another perspective, information technology has enhanced production of goods that are of better quality than before. The standards of living are determined by the quality of goods and services that we use.
The productive output of the global economy is therefore leveraged at a stronger comparative advantage than what existed formerly. This is an invitation towards a change in the consumption models of the consumers thus increasing the potential suit of the economic productivity. Information technology has promoted this in major ways. Firstly, it is by enabling organizations to gather information about quality of products and consumer demands which help the producers to manufacture products that are consumer need oriented and that meets the consumer needs of the society.
The second way is by facilitating producers and persons to contribute in the markets by connecting the people to quality products which they never used to value before due to lack of information. Finally, information technology has yielded a lot benefits in driving various innovations. It has been a source of powerful data analytical tools for researchers. This has enabled individuals and organizations to participate in development of new products with ease since processing of data has been made cheap and accessible.
This was not possible before the emergence of IT. Elsewhere, through the use of information technology, small businesses have been able to grow by investing in development research which gives them a chance to compete on leveled ground with bigger companies. Additionally, IT provides an opportunity to global organizations to manage and develop their human resource capital in a better way. This is done by storing knowledge for reuse by the workers in various operations of organizations (Mowery, Nathan, 1991, p. 53).
In conclusion therefore, information technology came as a potential benefits towards creating strong models of economic functionality by allocating the scarce production resources in the most optimal way. The emergence if IT can be described as the coinage of refuge that guides the contemporary global economy towards frontiers of expanded horizons in its economic functions.
Antonelli Christiano (2002) The Economics of Innovation, New Technologies and Structural Change. London, Rutledge, pp. 16 Jacob Mann (2006) The Process of Information Technology and Models of Economic Change.
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