Disruptive technologies and global trade
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Several breakthrough technologies have emerged in recent years, leading to the automation of manufacturing and industrial activities, which also comes with digital transformation challenges. This development has been dubbed the “next industrial revolution” or “the next Internet” by many analysts. These developments may have various structural effects on global value chains.
Recent trends indicate that trade rules have evolved in reaction to technological advancements. Disruptive technologies appear to significantly impact the economic structure of numerous businesses.
Innovation has resulted in significant changes in traditional trade, whether in cost reduction, efficiency benefits, or productivity improvements.
What Are Disruptive Technologies?
Disruptive technology is defined as technology that impacts the usual operation of a market or industry. It supplants an established product or technology, establishing a new enterprise or market.
What Are The Effects Of Disruptive Technologies On Global Trade?
Continuous technological advancements with reduced labour costs threaten to undo part of the motivation for shifting manufacturing to less-developed economies. While facilitating cross-border commerce and investment to encourage technology transfer from overseas, a developing country must enhance its internal capacities to adapt/create innovations.
Existing Challenges In Global Trade
- Rising Tariffs
The United States wields considerable economic power and influence as the world’s largest economy. However, under President Trump, the US has decided to engage in a series of trade battles, with tariffs serving as the primary weapon. Throughout his campaign, Donald Trump repeatedly emphasized that he believed the United States was suffering due to a series of terrible trade deals and currency manipulation measures employed by countries such as China. After taking office, President Trump began putting various tariffs on imported goods, justifying them as an attempt to improve trade circumstances for the United States. Trump has imposed tariffs ranging from 10% to 25% on Chinese imports valued in the hundreds of billions of dollars. Solar panels, steel, aluminium, and various other products exist. As a result of these tariffs, China has imposed levies on hundreds of billions of dollars in American goods.
- . Intellectual Property Theft And Counterfeiting
This is largely an issue between China and the United States. President Trump had accused China of engaging in widespread intellectual property theft through hacking and coerced technology transfers. Many diverse groups have accused the Chinese of counterfeiting numerous brands and items. The theft of intellectual property by Chinese corporations is a big problem. Even China’s President Xi Jinping has spoken out against it, stating that tougher penalties for infringement and violators are required.
Intellectual property theft is a big worldwide trade concern because it permits corporations to profit illegally from other companies’ accomplishments. It decreases the incentive for businesses to innovate and frequently leads to marketplaces being saturated with unauthorized products. This enhances competition and hence lowers prices for businesses that invested money in R&D to develop and improve their products and should therefore be able to charge more to recuperate those expenditures.
Top Five Technologies That Might Change Global Trade
- Artificial Intelligence (AI)
Smart gadgets that use AI can monitor, collect, and interpret pertinent data and make optimized judgments at blazing speeds that outperform human skills. AI could revolutionize industries such as finance in less than 25 years.
- Virtual Reality (VR)
We encounter the world and learn about our reality through our five senses, and the information provided to our minds can affect our perception of reality. VR opens a portal into a universe in which our senses can be presented with a version of reality that isn’t real but is perceived as such.
VR has had and may continue to significantly impact many industries, including skill development, surgery, and gaming. Flight simulators are widely used nowadays and offer low-risk (accident-free), cost-effective, and environmentally friendly (no carbon emissions from jet fuel) ways for pilots to learn an essential skill.
- Gene Editing Technologies
CRISPR has shown promise, a pair of molecular scissors that can accurately edit or change a target DNA sequence. It was discovered in the bacterial immune system, which severs viruses that infiltrate our bodies. Although still in its early phases, CRISPR can potentially prevent various hereditary diseases, including cancer, neurological diseases, and blood disorders. It was recently used as a coronavirus treatment and diagnostic tool. It even holds the potential for developing disease-and-drought-resistant crops and the mass production of biofuels to tackle the climate issue. Finally, gene editing may be key to disease prevention rather than just diagnosing and treating.
- Blockchain
Blockchain is a distributed public ledger not controlled by a single person or entity. While bitcoin is the most well-known yet little-understood blockchain application, blockchain can revolutionize everything from political (voting) to economic (digital currencies and smart contracts) institutions. Smart contracts (programmatic agreements between two parties) implemented on the blockchain enable lenders to automatically initiate actions such as margin calls, collateral release, or locking cars (through IoT) when a car payment is not completed on time. In today’s political environment, blockchains can help assure that only eligible people can vote, that votes cannot be tampered with and that voting can be done securely via a smartphone.
- Nanotechnology
Nanotechnology allows the manipulation of matter at a near-atomic size to create new structures and materials. It can potentially make a wide-ranging impact on healthcare, manufacturing, and other businesses.
Nano-sensors in packaging can aid in detecting salmonella-type contamination in food science. One relevant and most promising area is tailored medicine delivery and healthcare.
In the not-too-distant future, we may be able to treat cancer by selectively targeting harmful cells and promoting nerve cell growth with nanoliters to regenerate damaged spinal nerves. Nanostructured filters can also eliminate viruses and other pollutants from water, resulting in an abundance of safe drinking water.
Possible Strategies For Developing Countries To Be Part Of The New Tech-Driven Global Economy
- Better macroeconomic conditions (create a stable economic climate of low inflation and positive economic growth).
- Promote private-sector investment through free-market supply-side policies such as privatization, deregulation, and reduced taxes.
- Government interventionist supply-side measures, including more lavish spending on “public goods” like education, public transportation, and healthcare.
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