Labor demand has shifted from low-skilled labor towards high-skilled labor. As a consequence of this more specialized workers are needed. Because of the fact that specialized workers have to be highly educated, the wages will be higher and this will eventually lead to an increase in the income distribution of the top percentile. The people at the lower percentiles are mostly lower educated people and are therefore not able to perform this high-skilled labor. Last but not least, globalization causes an increase in economic inequality.
Some experts assert that technological change is beneficial for all groups in our society, which the changes are more evolutionary than revolutionary in nature, and that technology ultimately creates more jobs than it eliminates. It includes innovations sophisticated communication systems, flexible manufacturing systems, computer-assisted design or industrial robots. These modern technologies incorporate powerful and low-cost microelectronic devices that have the potential to increase productivity in office and factory production tasks. From another perspective, there a recurrent fear has been that technological change will spawn mass unemployment. Some experts say that the pace of technological change is accelerating and that thousands of workers in plants and offices are affected as labor saving innovations are diffused more widely.
Technological progress has many aspects to it such as increased quantities of output, more quality products, and a large variety of products, this leads to a rise in output in capital or labour depending on given amount. Capital stock reaches a stable level without in involvement of technological progress and therefore ceases the economy from growth, however this technological progress allows the production function to shift upwards by giving the opportunity to produce more output from a level of factor inputs which in return increases the potential level of capital. “Technological progress is the key to a countries long term increase in its material well being” because it involves innovation and invention. Invention is the finding of new and fresh ideas and innovation is the implementing and bringing to life of these ideas, and over a period of becomes a potential source of economic growth. The graph below shows technological progress increases
Large companies are often able to under-cut competitors’ prices, drive them out of the market, and then raise prices again. Consequently, this increased volume increases profit, allowing such companies an even greater power. Technological superiority. As the production scale of a company increases they become better equipped to employ the use of superior technology, such as specialized labor or machines, which results in greater efficiency. No substitutes.
Support of other industries On the other hand , diseconomies of scale refers to disadvantages that arise due to expansion of a firm’s capacity leading to a rise in the average cost of production, similar to economies of scale , diseconomies of scale can also be categorized into internal and external diseconomies of scale. o Internal Diseconomies: this refers to the diseconomies which a firm incurs due to the growth of the firm itself. This results in the decrease in the firms output and increase in the long run average cost. The two main reasons for internal diseconomies of scale are as follows: 1. Managerial inefficiency : When a firm expands its production capacity , control and planning also needs to be increased, this requires the management to be more efficient .
Global income inequality: When compared to other nations, the U.S. is one of the richest despite the severe income gap among its own citizens. Although many U.S. citizens are classified as low-income, their wages are still a great deal higher than citizens from poorer countries. Most of the world’s top 1% live in the U.S., increasing the overall national average income. Global inequality is also seeing a decline as developing nations develop and become industrialized. In spite of growing populations, especially in underdeveloped countries, the economic growth brought on by industrialization has helped many families escape living in poverty.
So, a more competitive economy is the one that is expected to grow more rapidly over the way to long term. The two dissimilar concepts of productive efficiency are: relative efficiency in manufacturing exportable goods and absolute point of production costs related to other countries. Relative efficiency doesn’t show competitiveness as a whole of different countries rather it clarify the paths of Global specialization in production whereas absolute production costs defined how successful countries are in global marketplace for individual goods [Irfan ul Haque
Rising wages are a key cause of cost push inflation because wages are the most significant cost for many firms. (Higher wages may also contribute to rising demand) 2.2.2. Import prices If there is a devaluation then import prices will become more expensive leading to an increase in inflation. A devaluation or depreciation means the rand is worth less, therefore we have to pay more to buy the same imported goods. 2.2.3.
Economic globalization refers to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies. Nowadays the economic globalization is growing rapidly. The fast globalization of the world’s economies is mostly because of the rapid development of science and technologies. The key players of the economic globalization is no other than multinational corporations. A multinational corporation is an enterprise that engages in foreign direct investment (FDI) and owns or controls value adding activities in more than one country.
The higher the firms’ fixed cost, the firm will compete to increase the profit to cover the fixed costs. For CMP, there are more similar firms within an industry will lead to the higher the rivalry among existing competitors of CMP. The threat of new entrants is high when the new competitors are easy to enter to a market while low when there are significant entry barriers. The entry barrier blocks the ability of a firm to enter an industry. The large capital investment per unit of output in facilities tends to limit industry entry.