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Archives of Business Research – Vol. 9, No. 1

Publication Date: January 25, 2021

DOI:10.14738/abr.91.15325.

Eshehri, A., & Alsoaery, A. (2021). Bridging the Gap or Widening the Divide? The Role of Technology in Global Economic Inequality.

Archives of Business Research, 9(1). 195-203.

Services for Science and Education – United Kingdom

Bridging the Gap or Widening the Divide?

The Role of Technology in Global Economic Inequality

Abdulrhman Eshehri

Kingston

Abdulrahman Alsoaery

Kingston

ABSTRACT

This article explores the relationship between technological advancements,

transnational capitalism, and the growing divide in global economic inequality. It

analyzes how developed nations' dominance in technology research and innovation

has contributed to the disproportionate distribution of wealth, productivity, and

economic development. By examining data such as G7 countries' investments in

research and development, accounting for over 88% of global expenditure, and

their holding of over 90% of patents filed in 2014, the article highlights the intricate

links between multinational corporations, technological diffusion, and global

inequality. The findings reveal that the concentration of technological

advancements in a few developed countries not only fuels global capitalism but also

exacerbates the economic disparities between rich and poor nations. The article

calls for a more equitable approach to technological development and diffusion to

bridge this widening gap.

Keywords: Global Economic, Technology, Inequality

INTRODUCTION TO GLOBAL INEQUALITY AND TECHNOLOGICAL ADVANCEMENTS

Multinational corporations and technology and its diffusion are intricately linked with the

rising levels of global inequality. The contemporary digital age is characterized by

unprecedented technological advancements that have turned the world into an interconnected

global village. Massive technological advancements have fostered globalization and the notions

of transnational capital and labor that buttress the contemporary notion of global capitalism.

The emergence of transnational capitalism has promoted open trade, private and global

enterprises, and fostered massive increases in trade and investment flows; thus, spurring

improvement in national income and economic growth. However, advancements in technology

and the emergence of transnational capitalism have been characterized by a noteworthy

increase in global economic disparities and wealth inequalities. As various nations record

exponential economic growth due to technological advancements and increase in trade and

investment flows, the gap between the global rich and the poor has ballooned. Technology is at

the core of productivity and the disproportionate rate of technological advancement and

diffusion between the developed countries and developing nations through multinational

corporations has worsened global inequality.

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Archives of Business Research (ABR) Vol. 9, Issue 1, January-2021

Services for Science and Education – United Kingdom

The Role of Technology in Productivity and Economic Development

Technology is integral in determining productivity, which helps explain uneven economic

development. Technology is conceptualized as the rules and ideas that direct the way goods are

produced (Alguacil et al., 2011; Wang & Lin, 2021; Sabadash, 2013). Therefore, the notion of

technology not only encompasses landmark and innovative software and hardware, but also

the ideas behind their operations. Notably, it is a widely acknowledged fact in the field of

economics that some countries are more technologically advanced compared to others (Coe &

Helpman, 1995). Developed countries, such as the U.S. and England, are more technologically

advanced compared to developing countries like Kenya and Myanmar. Technology plays a key

role in determining productivity that is defined as an outcome measure of technology (Coe et

al., 1997; Barbosa & Eiriz, 2009). Differences in technological advancements among countries

result in productivity variations that explain the wealth inequalities between rich and poor

nations (Wooster & Diebel, 2010). Practically, advanced technological knowledge enables

developed nations, such as the U.S., to produce more goods, thus dominating international trade

and gaining more wealth compared to developing nations that are mostly technologically inept.

Therefore, technology and productivity contribute to uneven economic development.

Investment Disparities in Technological Research and Development

Developed nations have invested intensively in technological research and development

compared to developing countries, thus fostering global economic inequalities. The main

difference in technological knowledge between rich and poor countries lies in the fact that the

developed countries have invested heavily in the production of technological knowledge,

innovation, and invention compared to their developing counterparts. According to Gong and

Keller (2003), in 1995, members of the G7 accounted for 84% of the world’s total expenditure

on technological research and development. A survey conducted by the United States Patent

and Trademark Office in 2014 revealed that the same G7 countries invested more than 88% of

the world’s expenditures on research and development, with the rest of the international

community contributing a meager 12% towards technological advancements (Wang & Lin,

2021; van der Loos et al., 2020). Additionally, the same G7 countries took out more than 90%

of all patents filed with The United States Patent and Trademark Office in 2014 (van der Loos

et al., 2020). The self-evident variation in investments in technological research and

development means that only a few of the world’s richest countries account for the world’s

creation of new technology, further fueling global inequalities.

Competitive Advantages Through Innovation and the Slow Process of Technological

Diffusion

The creation of new technologies provides rich countries with immense competitive

advantages over their poor counterparts, which increases global inequality. Developed

countries invest heavily in research and development and are able to come up with innovations

and inventions. Through incessant innovation and invention, rich countries are the first to

access and utilize new forms of technology. The new forms of technology provide the developed

nations with immense competitive advantages that enable them to dominate over other

countries in the international market (Atkin et al., 2014; Atkin et al., 2017). Developing

countries, on the other hand, rely on technology diffusion in order to access and utilize the

various forms of technology invented by the rich countries. Technological diffusion refers to

the process and channels through which various forms of technology spread both within and

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Eshehri, A., & Alsoaery, A. (2021). Bridging the Gap or Widening the Divide? The Role of Technology in Global Economic Inequality. Archives of Business

Research, 9(1). 195-203.

URL: http://dx.doi.org/10.14738/abr.91.15325

across countries (Keller & Yeaple, 2009; Kemeny, 2009; Kemeny, 2011). However,

technological diffusion is a slow process as it mainly depends on international trade and foreign

direct investments (FDI) through multinational corporations. The slow spread of new forms of

technology to the developing world further worsens their ability to compete effectively with

their developed counterparts in terms of productivity, thus resulting in uneven development.

The Biased Nature of Technological Diffusion and Its Focus on Raw Materials

Technological diffusion mostly results in the transfer to the developing world technologies

primarily limited to the production of raw materials for export to developed countries, thus

furthering uneven economic development. According to Kemeny (2010), 90% of the

technologies transferred to the developing world are primarily aimed at enhancing the

exploitation of natural resources and raw materials, such as textiles, that are exported to the

developed countries. Economists from the uneven development school of thought and those

espousing Marxist-Leninist ideologies, such as Robert Gilpin, argue that technological diffusion

occurs mainly through transnational capitalism channels, and are inherently biased in favor of

the developed world (Bessen et al., 2010; Coe et al., 1997). Marxist-Leninism espouses that

international capitalism is imperialistic, expansionary, conflict, and inherently unstable, and so

are all its creations and processes, such as technological diffusion (Waldkirch & Ofosu, 2010;

Schuler et al., 2006). The majority of the technologies transferred to the developed world help

increase the quantities of raw materials exported back to the developed world for processing

into final products. Final products are worth more than raw materials in the international

market. Thus, technological diffusion increases uneven development as they further the

economic interests of developed countries compared to those of developing nations.

Social Capability and Its Role in Uneven Technological Development

The success of technological diffusion is dependent on social capability, which varies among

countries, promoting uneven development in the world. Technological advancement in the

developing world is dependent not only on spillovers, but also on social capability. Social

capability is defined as the ability of a country to absorb various forms of technology, which is

dependent on the existence of certain societal and institutional competencies (Keller, 2010;

Keller & Yeaple, 2009). Societal and institutional competencies, such as human capital facilities,

influence the adoption of new technology in developing countries. Developing countries with

better societal and institutional competencies, such as literate and skilled human capital, are

more likely to adopt various forms of technology compared to nations with poor social

capabilities. Markedly, it is well accepted in economic circles that various countries in the

world, especially developing nations, have divergent levels of social capabilities (Keller, 2002).

For example, South Africa has more advanced social capabilities compared to Myanmar. The

variance in nations' social capabilities means various developing countries adopt new forms of

technology at diverse rates. Therefore, the variance in countries' social capability explains why

technological diffusion has not solved but rather worsened uneven development in the

developing world.

Geographical Influence on Technological Diffusion and Economic Development

Technological diffusion is also shaped by geography. Thus, further worsening uneven economic

development in the world. According to Keller (2004), like all forms of diffusion technological

diffusion is a form of contagion whose probability of transmission from one country to the other