as a result of technology, globalization has become

The rise of technology is introducing opportunities and obstacles for global and domestic companies alike. Solved As a result of globalization and new information | Chegg.com. He also serves as the Research Director of journalistsresource.org. Therefore, it is not surprising that the foreign output gap weighted by 13 trading countries shows greater volatility than that of the U.S. as shown in Fig 2. As the names suggest, media globalization is the worldwide integration of media (all print, digital, and electronic means of communication) through the cross-cultural exchange of ideas. Retrieved from, Smith, A., Anderson, M., Smith, A., & Anderson, M. (2018, September 19). Chang [22] investigates the causal linkages between globalization and inflation in 21 OECD countries by using panel causality analysis for 19702010. The impact of the nonfarm labor productivity on inflation is significant at the significance level of 5%. Given the weak empirical evidence based on the U.S., Ball [18] believes that globalization is difficult to generate for domestic inflation. Besides, the results of the study also show that the impact of technology on inflation has been enhanced since 2008. As a result, thedigital dividemight mean no access to computers or the Internet, but could mean access to the kind of online technology that allows for empowerment, not just entertainment (Washington 2011). Other programs are funded by business organizations that seek to help peripheral nations with tools for innovation and entrepreneurship. Cultural and ideological bias are not the only risks of media globalization. Citation: Lv L, Liu Z, Xu Y (2019) Technological progress, globalization and low-inflation: Evidence from the United States. He represents Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Panama, Philippines, Suriname, and Trinidad & Tobago. At present, the global economy is either at or near full employment, but inflation remains in the doldrums. In other words, the fast recovery of the U.S. can be an important reason for its smoother domestic output gap compared with most trading countries. But demographic change can also create impetus for price increases: according to the life-cycle hypothesis, an aging population means that the elderly eventually dissave and consume more [7]. In this paper, we adopt the models based on NKPC to estimate the factors driving the dynamics of core inflation. The price of some information and communications technology (ICT) products has rapidly decreased from the 1990s onward, due to technological change [29]. To what extent is technology becoming a cultural universal? In these countries, far fewer people have the training and skills to take advantage of new technology, let alone access it. Global data and statistics, research and publications, and topics in poverty and development, The World Banks digital platform for live-streaming, Environmental and Social Policies for Projects, International Development Association (IDA). Globalization have been claimed to be the key factor driving inflation all the ways. Arguably, by unmasking and shedding light on some of the vulnerabilities and fragility caused by globalization, the COVID pandemic has become the proverbial tipping point in globalization's trajectory. Another aspect of thedigital divideis present in the type of community one lives in. Drag of the technology variable were got from the Bureau of Labor Statistics Producer Price Indexes Databases. Over the five years ending in December 2017, the percent change in the Consumer Price Index (CPI), at 7.25% (or 1.41% at an annual rate), was the lowest rate of price increase seen in the U.S. in half a century [1]. Economically, globalization involves goods, services, data, technology, and the . In the 2000s, however, the prices for low-end computers dropped considerably, and it appeared thedigitaldividewas naturally ending. Specifically, the P-J values in Table 3 are larger than 10%, meaning that we should reject the null hypothesis. Published: 11 January 2022 Global Risks Report 2022 Chapter 3. Figure 2. For the pre-2008 period, when the technology is not considered, the coefficient of domestic output gap is not significant, regardless of whether considering the globalization variable. Alan Greenspan stated in testimony before the U.S. Congress in 2005: The past decade of low inflation and solid economic growth in the United States and in many other countries around the world is attributable to the remarkable confluence of innovations that spawned new computer, telecommunication, and networking technologies, which, especially in the United States, have elevated the growth of productivity, suppressed unit labor costs, and helped to contain inflationary pressures [26]. Table 5 summarizes the results for the second exercise sensitivity study. Data after 2010 show that this negative correlation is no longer obvious. Data Availability: All relevant data are open available from the following URLs. These Twitter updatesa revolution in real timeshow the role social media can play on the political stage. Click the card to flip 1 / 71 Flashcards Test Created by AlexD2121 It notices that except for foreign output gap and technical drag variables in 2008, the three variables have the same significance at the 1% level in all break points sample period. As a result, the number of Black and Hispanic students in courses like Advanced Placement Computer Science has increased dramatically in recent years, as has the number of college majors from the same populations. Business. In addition, the real variables at the current period in Model (3) are likely to be correlated with the contemporaneous random disturbance variable. As people, ideas, knowledge, and goods move more easily around the globe, the experiences of people around the world become more similar. Exports of automotive products have grown tremendously because of globalization, as cooperation among countries provides better economies of scale. As for the contribution of technology price to price increases in various industries, the weights of technical inputs are calculated using the prices in each year, (quarterly observations within one year use the same weight of the year). Available from: https://www.phil.frb.org/. Borio & Filardo [20] provide evidence supporting the impact of globalization on inflation in OECD countries. Foreign real output gap was sourced from the U.S Bureau of Economic Analysis database. Since the price component of ICT is heavily weighted in the CPI, its price changes dominate other ICT components. Second, we assess the robustness of the baseline finding by dropping the foreign output gap and the technical drag variable from the extended version of the hybrid NKPC model. (Suu Kyi had previously spent years under house arrest.) #1 Automobile Manufacturing. In the early 2000s, the United States offered about 1,500 newspapers, 2,800 book publishers, plus 6,000 magazines and a whopping 10,000 radio outlets (Bagdikian 2004). Social effects of technology 7. World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use. Globalization in History Globalization has a long history, for example, Ancient Greek . If Policy-makers can tolerate temporary low inflation without any reaction, the price level will be permanently lower, with no long-term impact on inflation [34]. Dozens of Chinese trade shows have been cancelled . Impact of Technology on Globalization. (2016, August 10). Advancements in technology have considerably facilitated globalization. Meanwhile, Dewett and Jones's [53] review paper made a detailed review on the information technology (IT) including 37 papers within the last five years that have been published in six leading management journals. The baseline results reported in groups (1), (2), and (3) in Table 3 reveal significant changes in the impact of the domestic output gaps, foreign output gaps, and technical drag variables on U.S. inflation over different sample periods. As a result of globalization and new information and communications technology, would you expect that the definitions of markets used by antitrust authorities will become broader or narrower? Since 2001, the prices of computers and electronic products, computer designs, and computer services have been declining, and other technology inputs have been causing the production cost and the final product price to drop by 0.5% each year [14]. While millions of students were confined to home and remote instruction, they were divided by their Internet access, their familiarity with computer hardware and software, and their ability to solve their own technology issues (PRB 2020). They conclude indicate that integration in the global economy is in fact important, but globalization has not yet induced changes in openness large enough to justify significant brakes in inflation dynamics. Criminalscan circumvent local laws against socially deviant and dangerous behaviors such as gambling, child pornography, and the sex trade. This paper intends to consider the impacts of globalization and technology on inflation simultaneously. When adding the foreign output gap, the coefficient of domestic output gap turns significant. It is worth paying special attention to the fact that the cyclical trend of the foreign output gap has a strong consistency with the core inflation in the United States. This finding indicates that we should take into account the developments in global economic performance and technology innovation trends in understanding the dynamic process of inflation. Available from: https://www.bls.gov/home.htm. The decreasing unemployment rate indicates that the U.S. labor market has recovered strongly and inflation is close to the FED's 2% target, which creates a sufficient policy space for the Fed's future projects. It refers to the spread of technologies across borders and around the world. Based on the break point of the 2006:Q1,2008:Q2 and 2011:Q3 regression estimate, both individual coefficient tests and the joint significance test are statistically significant, which provides clear evidence that the coefficients on domestic output gap, foreign output gap, and technical drag variables experience significant structural change in the three break points periods. The inflation rate in the U.S. has been running low for a long time. The results show that the internet improves productivity and, thus, will reduce inflation. Generally, the core inflation in the U.S. has been persistently below target since 2009, but the unemployment rates decreased from 7.7% (in 2010) to 4.3% (2017), as shown in Fig 1. Therefore, the model based on model (2) can be specified as: The weighted average of the output gaps of the major trading partners of the countries studied is used as the countrys foreign output gap. As technology continues to improve, the relative price of technology continues to decline. This includes both: The spread of technological knowledge (how to create technology); The literal movement of technology around the world (trade in . Madeleine Hillyer U.S. Media Specialist, World Economic Forum Our Impact What's the World Economic Forum doing to accelerate action on Technological Transformation? The F values are larger than 10 (the critical values are provided in [66] in most cases, thus suggesting that IVs are comparatively valid for our empirical analysis. As for the other three control variables federal funds rate, U.S. dollar index and nonfarm labor productivity, the federal funds rate and core inflation have shown a common trend to some extent. Global inter-organizational networks 5. The amount of technology used in production processes has more than doubled since the late 1990s, from $0.08 per $1 of output to $0.20 in real terms. Sometimes that change is as simple as being able to make a phone call to neighboring market towns. Does it matter to you who owns your local news outlets? Since the late 1990s, particularly since the global financial crisis, the core inflation of main developed economies has been persistently below target. The U.S. dollar index has a significant negative effect on domestic inflation in the pre-2008 period, while the other control variables are not significant in these two periods. To more accurately discriminate the stability of the above variables, we using the structure of the unit root testZA test. Globalization broke the barrier of distance, communication, buying and selling, travelling, and so on, turning the world into a small, developed . Tasks like updating a rsum or filling out a job application are much harder on a cell phone than on a large-screen computer in the home. Nevertheless, a decade after the outbreak of the global financial crisis, the central banks of the U.S., Europe, Japan, and other regions still strive to achieve their 2% inflation goals despite years of extraordinary stimulus measures. This study adopts the extended HNKPC to examine the driving factors in determinants of low inflation in the United States. The FED defined its monetary policy goal as full employment and the FOMC's 2% long-run objective since that goal was announced in January 2012 [5]. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Some schools sport cutting-edge computer labs, while others sport barbed wire. This inconsistent experience leads to an alternative specification of the above relationship, namely the Hybrid New Keynesian Phillips Curve, in which the explanatory variable also contains lagging inflation: In a country with democratic principles and an underlying belief in free-market capitalism, the answer is decided in the court system. The federal funds rate has a significance break data (2011:Q3).The domestic output gap, U.S. dollar index and nonfarm labor productivitys break points (2006:Q1, 2014:Q1 and 2009:Q2) are not significant. Knowledge, technology, and growth in long-term perspective 2.1 Long-term trends One of the best ways to see the role of knowledge in development . But approximately one in four Black and Hispanic people reported being smartphone-only Internet users, a number that far outpaces White peoples reliance on the devices. The size and significance level of the domestic output gap coefficients improves from the insignificant 0.009 pre-2008 to -0.02 at the significant level of 5% post-2008. Technological access tends to be clustered around urban areas and leaves out vast swaths of citizens. (4) Have you ever traveled to another country and been surprised to see American advertisements or watched American television or movies abroad? Technological breakthroughs compel business enterprises to become global by increasing the economies of scale and the market size needed to break even. Now we have a structural break point, based on which we can investigate the nature of changes in the U.S.s inflation dynamics and compare the impact of globalization and technology on inflation dynamics over different sample periods when the break in the underlying coefficients is recognized near the 2008 financial crisis period. Globalization is most often used in an economic context, but it also affects and is affected by politics and culture. development of economic globalization, it has become more and more independent. Did you have an idea for improving this content? This paper selects the federal funds rate t denotes monetary policy shock, the U.S. dollar index USDXt denotes exchange rate shock and the nonfarm labor productivity NLPt denotes unit labor costs. With 189 member countries, staff from more than 170 countries, and offices in over 130 locations, the World Bank Group is a unique global partnership: five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries. Industries are defined according to the 2007 North American Industry Classification System. Major Characteristics of the Global economy 1.Interdependence 2.deeply asymmetric -several "centers" and several "peripheries" and because both North and south are so internally diversified 3.increasing diversification within each region 4.selective inclusion 5. exclusionary segmentation economic of scale At the same time, the introduction of new technologies is changing the engine of growth in many developing countries and the nature of international trade. Our empirical investigations show that there is a significant structural change in 2008 in the extended NKPC model for the U.S., and we present three additional findings that add to the literature on U.S. low inflation dynamics. Many observers believe that globalization of the economy has changed the behavior of inflation. The study conclusions indicate that globalization has significantly changed some major industrialized countries inflation and show the effect of globalization on the inflation exhibits a high degree of heterogeneity. For example, the rigid structure of some economies may hinder the response of the pricing process to globalization. But this wave of innovation and potential business comes with costs. As for the three control variables, the federal funds rate and U.S. dollar index have significant positive effects on inflation at the significance level of 1%. But the numbers are misleading. Specifically, since inflation expectations are based on forecasts from all relevant information in and after t, the stochastic factors affecting the spot inflation rate (such as supply shocks due to changes in international oil prices) are likely to affect inflation expectations. However, in the real economy, severe exogenous shocks, such as institutional changes, changes in macroeconomic policies, and financial crises, may cause the data generation process of variable sequences to occur structural mutations. Inflation, Federal Funds Rate, U.S. dollar index were downloaded from the St. Louis FED's FRED database. The factors hindering the achievement of inflation targets are nothing more than commodity price, oil supply, weakness of aggregate demand, and various other factors. In 2018, more than 340,000 students in 51 countries took the ICT survey, providing a rich data set for analyzing key questions about technology use in schools. Almost any company (whether large or small or start-up) can now go global and reach potential customers faster and at lower cost. In early 2021, Myanmars military launched a coup against its government. Robustness: Dropping domestic, foreign or technology variables. , , are the coefficients of domestic output gap, foreign output gap, drag of technology variables that take into account the dummy variables. Some recipient countries have become significant new sources of research and development as well as patents. The foreign output gap in 2002 and 2009 coincides exactly with the lowest point of the core inflation rate in these periods, and the crest point is also in line with the peak of core inflation in 2008 and 2012. Source: Federal Reserve Bank of St. Louis economic database. In other words, the development status of technological innovation will significantly affect the trend of the domestic price change rate in the U.S. while globalization did not produce such an effect during the sample period. Martin Carnoy (1999) analyzes how globalization has been affecting education systems, directly and indirectly, and summarizes that globalization has recently brought the following major educational changes (pp. t is a random disturbance term with independent consistency distribution characteristics. Therefore, the contribution of ICT products (communications and IT) to CPI growth has occasionally been negative in Canada. Retrieved from. Watch and join usvia Live Chat: Seminar will be live-streamed, allowing for online audience participation (only available during the seminar). Which situation has become more common as a result of globalization? Immediately, citizens launched widespread and persistent protests against the coup. The trend of the U.S. dollar index and the core inflation have become certain trend. The most immediate impact is technology trade shows. It discusses some of the structural and cyclical factors behind inflation developments and proposes answers to two main questions: (i) What is the status of low inflation in the U.S.? The results for break points being 2006: Q1 and 2011: Q3 provide a scenario similar to the baseline finding. doi: 10.17226/1101. The Economist (2005) suggests that increased trade makes a mockery of traditional economic models of inflation, which generally ignore globalization [10]. For the breakpoint of 2006: Q1, the coefficient of the foreign output gap is negative and insignificant at the post-2006 period, whereas it is significant (0.02) at the 5% significance level post-2008. As for core inflation, except for 20052008, inflation is below the target of 2% during the rest of the study period. In addition, technological advances in areas like mobile phones can lead to competition, lowered prices, and concurrent improvements in related areas such as mobile banking and information sharing. According to the type of IT summarized in the literature, we identify technology-related inputs in the I-O data as follows: computer and electronic products tech1; broadcasting and telecommunications tech2; data processing, internet publishing and other information services tech3; and computer systems design and related services tech4. [4] You will read more about the influence of technology on social movements in later modules, but you can surely see examples around you of ways the technology has been used to raise awareness (like Twitter hashtags), fight stereotypes, or even change laws. When foreign output gap is not considered, the coefficient of domestic output gap is not significant. In addition, inflation expectations has a significance break data (2008:Q2). Globalization, health, and ICT. Therefore, we use either instrumental variables (IVs) or the GMM estimator to estimate Model (3) and eliminate the endogeneity problem. The term globalization describes the increased mobility of goods, services, labor, technology and capital throughout the world. Census data released in 2018 showed that in the study period of 2013 to 2017, 78 percent of U.S. households had Internet access, but that homes in rural and low-income areas were below that national average by 13 percent. In the United States, the Internet is used to access illegal gambling and pornography sites, as well as to research stocks, crowd-source what car to buy, or keep in touch with childhood friends. These weights are multiplied by the technology's PPI to derive the technology's contribution to each industry's PPI. By 2019, some of those numbers had changed: There were only 1,000 newspapers, but over 7,000 magazines (note that both newspapers and magazines count as such even if they publish largely online) (BBC 2019). Larger percentages of groups such as Latinos and African Americans use their phones rather than traditional computers to connect to the Internet and undertake related activities. This was the point when personal computer use shifted dramatically, from 300,000 users in 1991 to more than 10 million users by 1996 (Rappaport 2009). You can visit the websiteJournalists Resource. Xt are the control variable, other factors that affect inflation. Sharing of ideas, information, goods, and services through globalization is also possible because of advances in communication technology and the media. where t is the current inflation rate, Ett+1 denotes the currently expected price changes, t1 is the lagged inflation, is the domestic output gap, and denotes the weighted foreign real output gap, which represents the globalization, techt is the drag of technology on the inflation, also is the variable of interest in this article. 71873014) to ZL and the scientific research funding of the University of Science and Technology Beijing (no. However, disputes and international diplomacy are also large parts of the history of globalization, and of modern globalization. The factors hindering the achievement of inflation targets are nothing more than commodity price, oil supply, weakness of aggregate demand, and various other factors. Low inflation is a broad phenomenon that characterizes almost all the components of the CPI and countries. Based on the above description, Table 3 reports the estimation (GMM) results for model (3) over the whole sample, pre- and post-2008:Q2,where the first 28 rows are the estimated value and the NeweyWest (fixed bandwidth) HAC robust standard errors of the core parameters in the model. Our empirical specification is based on Bianchi and Civelli, Zhang and He [25, 43], who estimate an extended hybrid NKPC (HNKPC) for study globalization and inflation, in which the globalization indicator is represented by foreign output gap. The most important mobile trade show, Mobile World Congress, will either be cancelled or have greatly reduced attendance (the show is scheduled to begin February 24 in Barcelona, Spain). This shows that the impact of technological innovation on U.S. inflation has slightly increased after 2008.
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