As the future catches you December 6, 2009Posted by Pau Min Wong in As The Future Catches You.
The author made a compelling argument and provided substantial historical evidence that technology adoption leads to wealth accumulation for the community or nation. He continues to assert that nations wishing to prosper should depart from traditional resource-based economies and focus on developing “value-added” service industries. While I agree that knowledge driven industries increases productivity and economic value-add, I think there are significant risks involved when a country becomes over-reliant on such an economy. Singapore, for example, was worse hit amongst most South East Asian countries in the recent financial crisis. A balance should be struck between resource-based as well as knowledge-based economy in order to limit a nation’s exposure to extreme volatility in wealth creation and destruction.
As to the author’s point on concentration of knowledge pools within certain localized areas, communities or ‘zip’ codes, I’d like to add another potential reason for this phenomenon by drawing a parallel to the idea of specialization as a method of increasing efficiency. As globalization continues to lower trade barriers across geographies, localized communities no longer need to be self-sufficient. They can trade goods/services between them. Naturally, the need to remain competitive will drive local communities to specialize in order to maximize efficiencies, thereby creating localized centres of excellence.
A quick thought on corporate social responsibility: Should global corporations that profit from exploiting natural resources from countries such as Nigeria and Myanmar be responsible to ensure that some of the wealth created is reinvested in a sustainable way, e.g., help develop local communities, education, etc? When local governments fail, shouldn’t global corporations profiteering from the countries step in?