How Does Technology Affect The Economy Negatively
Technological change is part of an economic process and today technological advances have impacted day-to-day business operations by increasing the productivity of workers and investments, accelerating economic activity, promoting interdependence between industries and it has even changed consumer preferences and reshaped the way businesses produce and market their goods. However, Technological innovation comes at a price whereby some jobs will be destroyed and it’s even very expensive for small businesses to implement new technologies. So, below is a detailed review on how technology innovations can affect the economy negatively today.
Negative Effects of Technology on the economy:
- Excessive competition: Today, technology evolves very quickly and this implies that businesses must take-up these changes instantly by attempting to keep-up with the new technologies. However, this competition may not be favorable for starting businesses which usually tend to fail in business at an earlier stage.
- It’s Expensive to implement new-technologies: it’s actually very costly for small businesses to implement new technologies since they require new hardware and software. So, businesses that can’t afford new-technologies will collapse easily today leading to increased levels of unemployment.
- Increased levels of unemployment: Today, businesses that embrace new technologies tend to lay-off some employees because new-technologies usually do multiple tasks at once thus replacing the jobs that were done by some employees. For example Facebook has less employees yet it serves billions of people while companies like Kodak which had over 145,000-employees at the height of operation filed for bankruptcy. In fact, displaced workers are usually the first to feel the impact of technology-innovation.
- Implementing new-technologies can be time-consuming and confusing: Although keeping-up with new-technologies can be advantageous, implementing new hardware and software is not easy and it can at times lead to a decrease in productivity and revenue incase a technological upgrade does not go smoothly.
- Increased levels of crime in business: with technological-advancements, there has been an increase of crime at workplaces whereby tech-savvy employees can easily embezzle funds and make it very difficult for the company to trace. Additionally, hackers could also access your personal or financial-data of customers and this can greatly affect companies today. In fact, today companies are spending a lot of money and time on developing systems guards, like Anti-virus software in order to prevent information theft by hackers.
- Over reliance on technology by businesses: Today, many businesses integrate and implement technological-solution into their daily operations which is good but this implies that businesses can’t remove these technologies without facing serious difficulties. In fact, in the integrated technologies fail then businesses could find it very difficult to continue their daily operations thus affecting production levels.
- Impacts income distribution: once technology is integrated into a business, workers displaced by technological-advances may find it difficult to find other employment-opportunities since new jobs may require advanced skills that they may not have. In fact, technology impacts a number of jobs involving production of goods and services. Additionally, experts have predicted that 47 percent of all jobs may be automated in the coming decades, Middle-class jobs will be lost and that means the gap between the rich and poor will widen.
- Technology is taking over the educational-sector: Today, the internet has made online-learning a great alternative to traditional classroom instruction learning. In fact, many academic institutions are turning to blended learning which is a mix of online and classroom learning like Khan Academy and other colleges. However, institutions that don’t have online-courses are losing a lot of money on extra students learning from different locations of the world.
- Increased income inequality: Countries that develop and integrate new technologies like; USA, CHINA, RUSSIA, etc are actually experiencing a rise in income inequality amongst their citizens. On the other hand, experts say that the income per capita of the richest country of the world is 7-times higher than that of the poorest country. In fact, income inequality is a major issue because it leads to several other adverse effects like; economic inefficiency, undermining of social stability and solidarity, increases the fraction of a population that can qualify for some form of credit resources hence leading to a lower overall rate of saving in the society.
- Increased environmental degradation: Technological-advances lead to an increase in production of goods in manufacturing businesses. However, the rate at which natural-resources are being degraded in most countries is high and there are many health and environmental issues arising like air-pollution, waterborne diseases and exposure to harmful chemicals. In fact, the changes in the climate globally have increased the risk of natural disasters and other environmental risks which greatly affect the economies of different countries.
- Increased risks in the financial sector: Today, technology is allowing people to carryout online-banking, mobile-banking and online transactions through the use of Visa-card, PayPal and other services. However, these online services have increased on the risk of theft and other crimes in the financial sector today. For example, hackers can easily access your credit card details today and then use that information to steal a lot of money online.