Technology Development Trend How to Influence Economy Growth

By: Johnny Ch LOK

How smart mobile brings the impact of technology economyThe impact of technology economy in the market is very significant, infusing even the measurement of the market economy. Some of the largest indexes known in the market, such as the Dow Jones Industrial Average (DJIA) and the S&P 500, have changed. Tech powerhouses like Apple, Google, and Amazon, whose stocks are valued much higher than those of many long-time industrial members, are replacing large industrial super companies. Apple, with its high market capitalization, accounts for such a large share of the DJIA, for example, that any hiccup in its quarterly earnings can move the entire index, situation that was once done by other large corporations such as GM and Caterpillar.More on digital transformation:Technology has an amazing power of permeate companies. An important measurement of the technology economy is the observing the Worldwide IT Spending volume, which is regarding the corporate spending for hardware, software, data centers, networks, and staff, both internal and outsourced IT services. Currently, this volume is close to USD6 trillion per year. To put this number on a more illustrative perspective, if we were to consider the global technology economy a country and its yearly spending its GDP, it would be ranked as the world's third largest economy, between the economies of China and Japan and more than twice the size of the UK economy.Technology spending, gross margins and economic growth have a strong relationship when measured by productivity and GDP. A good example is that executives can predict with some accuracy the impact on the overall economy of a decline in technology spending. Whenever companies cut back on discretionary spending in order to improve profits during a downturn, they slash their investments in technology. Soon afterward, GDP falls dramatically, and, within a few years, labor productivity across the economy falls, as technological innovation is an important component of productivity. The drop in technology intensity that results from a decline in technology spending causes the labor force to decrease, which shows up in productivity up to three years later because productivity is a "stickier" measure.As a matter of fact, whenever considering a company's productivity, it possible to observe not only a connection between technology intensity and gross margins but also a strong correlation, which means that technology intensity and gross margins tend to rise and decline together, one as a consequence of the other. It's possible to set as a recent example of this effect before and after the recent world economic crash that started in 2007, when companies were investing more and more heavily in technology relative to revenues and operating expenses, and gross margins were rising. That trend accelerated through 2008 and until 2009, when companies realized what had happened and began to cut technology investment dramatically. After that, technology intensity dropped precipitously along with gross margins.Within most companies around the globe, in every single industry, technology investment is growing faster than revenues and, in many cases, faster than the GDP of any country. It is clear to all companies that technology is vital to to the successful operations of companies and, mainly, to the global economy, but being able to manage technology spending properly within a few years ahead will require an increasingly sophisticated way of looking at the world and at a company's performance.

• Format: Paperback
• Language: English
• ISBN: 1673506259
• ISBN13: 9781673506259
• Release Date: December 2019
• Publisher: Independently Published
• Length: 241 Pages
• Weight: 1.60 lbs.
• Dimensions: 0.5" x 8.3" x 11.7"