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Technology Technology is a pool of freely available information used to produce goods of value (Public good). Technology Technology is a pool of freely available information used to produce goods of Technology can also be defined as the knowledge of a process. value (Public good). Technology Technology is a pool of freely available information used to produce goods of value (Public good). Technology can also be defined as the This process could be the process of producing a commodity, the process of rendering a service, or the process of managing an institution. knowledge of a process. Technology Technology is a pool of freely available information used to produce goods of value (Public good). Technology can also be defined as the knowledge of a process. This process could be the process of producing a commodity, the process of rendering a service, or the Therefore it is a dynamic rather than a static concept. process of managing an institution. Technology Technology is a pool of freely available information used to produce goods of value (Public good). Technology can also be defined as the knowledge of a process. This process could be the process of producing a commodity, the process of rendering a service, or the process of managing an institution. Therefore it is a dynamic rather than That is, it is a continuously evolving process which requires adaptation and modification on an ongoing basis. a static concept. Technology Transfers Technology transfers occur through: • Trade (goods and services as well direct sales of factories and know-how) • Lifestyle (TV, Movies, Internet) • Business Methods Technology: sectoral and regional impact Technology transfer impacts: • Urban communities • Rural areas Resource Bases for Industrialization • Internal public resources include government investments to create infrastructures and to deliver essential services Resource Bases for Industrialization • Internal public resources include government investments to create infrastructures and to deliver essential services • Internal private resources, comprising local businesspeople and entrepreneurs Resource Bases for Industrialization • Internal public resources include government investments to create infrastructures and to deliver essential services • Internal private resources, comprising local businesspeople and entrepreneurs • External public resources include supranational institutions such as the UN Resource Bases for Industrialization • Internal public resources include government investments to create infrastructures and to deliver essential services • Internal private resources, comprising local businesspeople and entrepreneurs • External public resources include supranational institutions such as the UN • External private resources: the contributions of international corporations Technology Transfers: Positive and Negative Effects Technology Transfer Positive Negative Product Sales (Consumer) Upgrades Consumption know how/consumer education Affordable only to affluent segments Product Sales (Industrial) Upgrades production process technologies; technician/engineering skills; lowers per unit production costs/prices Licensing, technology agreements; corporate R & D efforts Broadens, elevates technology bases and workforce vocational and scientific skills Banking and Financial institutions Mobilizes savings to create investment markets for public/private sector-stock market capital; consumer/installment credit for individuals and business Displaces workers with more intensive use of capital Wall-Mart effects on the local businesses. Only the wealthy benefit in the short term and leads to power concentrations; possible unwanted foreign influences encouraging buyers to purchase goods beyond their means. Technology transfer positive negative Local procurement of materials and components Stimulus for private enterprise/local initiatives Easier for other foreign firms to meet procurement quality requirements Establishment of wholesale/retail distribution systems Creates distribution infrastructure/expertise; increases customer exposures to modern goods & services Foreign control over distribution; consumer exposed to products that are beyond their means to purchase Worker training in technologies and production know how Upgrades labor skills and vocational bases For a minority only; majority have insufficient education Management training in organizational know how/methods Increased managerial education and efficiency Financial and accounting skills Planning and budgetary control Only educated elites benefit Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions: Democratization Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: • Market oriented decision making Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: • Market oriented decision making • Infrastructure must be replaced to accommodate the new environment. Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: • Market oriented decision making • Infrastructure must be replaced to accommodate the new environment. Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: • Market oriented decision making • Infrastructure must be replaced to accommodate the new environment. • Tribal system would be replaced with individualistic modes operandi Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: • Market oriented decision making • Infrastructure must be replaced to accommodate the new environment. • Tribal system would be replaced with individualistic modes operandi • Migration to Urban areas Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: • Market oriented decision making • Infrastructure must be replaced to accommodate the new environment. • Tribal system would be replaced with individualistic modes operandi • Migration to Urban areas • Production base changes from Agriculture to industrial Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: • Market oriented decision making • Infrastructure must be replaced to accommodate the new environment. • Tribal system would be replaced with individualistic modes operandi • Migration to Urban areas • Production base changes from Agriculture to industrial • Landlords become share-holders Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: 3-- Changes in cultural institutions – Family systems change from extended to nuclear Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: 3-- Changes in cultural institutions – Family systems change from extended to nuclear – Hereditary and seniority social class systems to economically-based (income, wealth) Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: 3-- Changes in cultural institutions – Family systems change from extended to nuclear – Hereditary and seniority social class systems to economically-based (income, wealth) – Gender orientations: patriarchal to egalitarian Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: 3-- Changes in cultural institutions – Family systems change from extended to nuclear – Hereditary and seniority social class systems to economically-based (income, wealth) – Gender orientations: patriarchal to egalitarian – Religiosity: declines with industrialization Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: 3-- Changes in cultural institutions – Family systems change from extended to nuclear – Hereditary and seniority social class systems to economically-based (income, wealth) – Gender orientations: patriarchal to egalitarian – Religiosity: declines with industrialization – Education systems: from informal to formal Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: 3-- Changes in cultural institutions – Family systems change from extended to nuclear – Hereditary and seniority social class systems to economically-based (income, wealth) – Gender orientations: patriarchal to egalitarian – Religiosity: declines with industrialization – Education systems: from informal to formal – Cultural homogenization: the Melting Pot Society Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions: 3-- Changes in cultural institutions – Family systems change from extended to nuclear – Hereditary and seniority social class systems to economically-based (income, wealth) – Gender orientations: patriarchal to egalitarian – Religiosity: declines with industrialization – Education systems: from informal to formal – Cultural homogenization: the Melting Pot Society – Social behaviors: conformist to individualistic behaviors Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions 3-- Changes in cultural institutions 4-- Change in Social Behavior • Conformist to Individualistic, We to Me Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions 3-- Changes in cultural institutions 4-- Change in Social Behavior • Conformist to Individualistic, We to Me • Religion loses its grip Economic Development Effects on Institutions and Behaviors 1-- Change in Political Institutions 2-- Change in Economic Institutions 3-- Changes in cultural institutions 4-- Change in Social Behavior • Conformist to Individualistic, We to Me • Religion loses its grip • More delineated (defined) rules of law. Economic Development Effects on Institutions and Behaviors Individual Changes in Values and Behaviors Interpersonal behaviors: insider-outsider distinctions break down Economic Development Effects on Institutions and Behaviors Individual Changes in Values and Behaviors Interpersonal behaviors: insider-outsider distinctions break down Individual values: Breakdown of traditional values (formality, trust, dislike of change, risk, fatalism, conformism) to modern values (low levels of trust, formality; preferences for efficiency, change, risk; self-help, individualism encouraged) Economic Development Effects on Institutions and Behaviors Individual Changes in Values and Behaviors Interpersonal behaviors: insider-outsider distinctions break down Individual values: Breakdown of traditional values (formality, trust, dislike of change, risk, fatalism, conformism) to modern values (low levels of trust, formality; preferences for efficiency, change, risk; selfhelp, individualism encouraged) How Individuals Adapt to Industrializing Societies: The “Rat Race” Emulation Cycle: Individuals migrate to towns and become committed to jobs and urban lifestyles. Impetus for Sustained Development: The “Rat Race” Emulation Cycle 1. Industrializing society uses economic criteria to determine social position Migration to towns, young workers join industrializing society 6. Work hard to emulate of consumption patterns of social superiors “Demonstration Effect” Exposure to new products, media, lifestyles 5. Commitment to industrial society increases 2. Work becomes “means to the end” work ethic cultivated 3. Wages allow new consumption patterns to form and 4. Materialistic behaviors take hold Developmental Effects:Industry Behavior – Supply chain development: orderly integration of suppliers, manufacturers and distribution systems Developmental Effects:Industry Behavior – Supply chain development: orderly integration of suppliers, manufacturers and distribution systems – National trade policies: From protectionist to free trade economies Developmental Effects:Industry Behavior – Supply chain development: orderly integration of suppliers, manufacturers and distribution systems – National trade policies: From protectionist to free trade economies – Local labor costs and availability: From abundant low cost unskilled labor to high cost skilled labor Developmental Effects:Industry Behavior – Supply chain development: orderly integration of suppliers, manufacturers and distribution systems – National trade policies: From protectionist to free trade economies – Local labor costs and availability: From abundant low cost unskilled labor to high cost skilled labor – Infrastructure development: • Physical: roads, ports Developmental Effects:Industry Behavior – Supply chain development: orderly integration of suppliers, manufacturers and distribution systems – National trade policies: From protectionist to free trade economies – Local labor costs and availability: From abundant low cost unskilled labor to high cost skilled labor – Infrastructure development: • Physical: roads, ports • Financial: banking systems Developmental Effects:Industry Behavior – Supply chain development: orderly integration of suppliers, manufacturers and distribution systems – National trade policies: From protectionist to free trade economies – Local labor costs and availability: From abundant low cost unskilled labor to high cost skilled labor – Infrastructure development: • Physical: roads, ports • Financial: banking systems • Social: government support systems (cost to employers in the form of taxes) Developmental Effects:Industry Behavior – Supply chain development: orderly integration of suppliers, manufacturers and distribution systems – National trade policies: From protectionist to free trade economies – Local labor costs and availability: From abundant low cost unskilled labor to high cost skilled labor – Infrastructure development: • Physical: roads, ports • Financial: banking systems • Social: government support systems (cost to employers in the form of taxes) • Education: training managerial and technical support. • Government incentives, services, and influences determine the direction and speed of development. Developmental Effects:Industry Behavior – Supply chain development: orderly integration of suppliers, manufacturers and distribution systems – National trade policies: From protectionist to free trade economies – Local labor costs and availability: From abundant low cost unskilled labor to high cost skilled labor – Infrastructure development: • • • • • Physical: roads, ports Financial: banking systems Social: government support systems (cost to employers in the form of taxes) Education: training managerial and technical support. Government incentives, services, and influences determine the direction and speed of development. – Demand Factors Developmental Effects:Industry Behavior – – – – Supply chain development: National trade policies: Local labor costs and availability: Infrastructure development: – Demand factors • Market affluence increases: middle classes emerge Developmental Effects:Industry Behavior – – – – Supply chain development: National trade policies: Local labor costs and availability: Infrastructure development: – Demand factors • Market affluence increases: middle classes emerge • Market demand: aggregate supply > demand; as a result marketing becomes more important competitive tool to get rid of the excess supply Developmental Effects:Industry Behavior – – – – Supply chain development: National trade policies: Local labor costs and availability: Infrastructure development: – Demand factors • Market affluence increases: middle classes emerge • Market demand: aggregate supply>demand; marketing becomes important competitive tool • That means Media communications: more commercial media Developmental Effects:Industry Behavior – – – – Supply chain development: National trade policies: Local labor costs and availability: Infrastructure development: – Demand factors • Market affluence increases: middle classes emerge • Market demand: aggregate supply>demand; marketing becomes important competitive tool • Media communications:more commercial media • That necessitates urbanization: Rural to urban population movements shift demand Developmental Effects:Industry Behavior – – – – Supply chain development: National trade policies: Local labor costs and availability: Infrastructure development: – Demand factors • Market affluence increases: middle classes emerge • Market demand: aggregate supply>demand; marketing becomes important competitive tool • Media communications:more commercial media • Rural to urban population movements shift demand. This leads to • Cultural diversity decreases: more homogeneous demand Developmental Effects on Industry: Business Practices – Corporate behaviors • From small scale, harmonious, output-oriented firms to large scale, profit-oriented, competitive organizations Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes • Decision making: from orders given to employee involvement Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes • Decision making: from orders given to employee involvement • Goal setting and planning: top-down to consensus Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes • Decision making: from orders given to employee involvement • Goal setting and planning: top-down to consensus • Leadership styles: from autocratic to democratic Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes • Decision making: from orders given to employee involvement • Goal setting and planning: top-down to consensus • Leadership styles: from autocratic to democratic • Motivation methods: fear/punishment to rewards/involvement Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes • Decision making: from orders given to employee involvement • Goal setting and planning: top-down to consensus • Leadership styles: from autocratic to democratic • Motivation methods: fear/punishment to rewards/involvement • Management-worker interactions: few to frequent Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes • Decision making: from orders given to employee involvement • Goal setting and planning: top-down to consensus • Leadership styles: from autocratic to democratic • Motivation methods: fear/punishment to rewards/involvement • Management-worker interactions: few to frequent • Career progression: seniority/loyalty to objective merit Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes – Developmental effects on marketing practices • Segmentation: ethnic/geographic to income/demographic/psychographic criteria Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes – Developmental effects on marketing practices • Segmentation: ethnic/geographic to income/demographic/psychographic criteria • Limited to extensive product lines Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes – Developmental effects on marketing practices • Segmentation: ethnic/geographic to income/demographic/psychographic criteria • Limited to extensive product lines • Urban-based marketing to national coverage Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes – Developmental effects on marketing practices • Segmentation: ethnic/geographic to income/demographic/psychographic criteria • Limited to extensive product lines • Urban-based marketing to national coverage • Price becomes a competitive marketing tool Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes – Developmental effects on marketing practices • Segmentation: ethnic/geographic to income/demographic/psychographic criteria • Limited to extensive product lines • Urban-based marketing to national coverage • Price becomes a competitive marketing tool • Distribution: geographic to product specialization Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes – Developmental effects on marketing practices • Segmentation: ethnic/geographic to income/demographic/psychographic criteria • Limited to extensive product lines • Urban-based marketing to national coverage • Price becomes a competitive marketing tool • Distribution: geographic to product specialization • Marketing emphasis: distribution to demand creation Developmental Effects on Industry: Business Practices – Corporate behaviors – Management style changes – Developmental effects on marketing practices • Segmentation: ethnic/geographic to income/demographic/psychographic criteria • Limited to extensive product lines • Urban-based marketing to national coverage • Price becomes a competitive marketing tool • Distribution: geographic to product specialization • Marketing emphasis: distribution to demand creation • Market research becomes important Developmental Effects on Consumer Behavior Purchasing roles change from patriarchal to egalitarian as families acquire purchasing power and buy more products Developmental Effects on Consumer Behavior Purchasing roles change from patriarchal to egalitarian as families acquire purchasing power and buy more products Sources of information change from personal to commercial media Developmental Effects on Consumer Behavior Purchasing roles change from patriarchal to egalitarian as families acquire purchasing power and buy more products Sources of information change from personal to commercial media Branding: becomes important to consumers and firms Developmental Effects on Consumer Behavior Purchasing roles change from patriarchal to egalitarian as families acquire purchasing power and buy more products Sources of information change from personal to commercial media Branding: becomes important to consumers and firms Labor saving products (refrigerators, canned, frozen foods) become important as more women work Developmental Effects on Consumer Behavior Purchasing roles change from patriarchal to egalitarian as families acquire purchasing power and buy more products Sources of information change from personal to commercial media Branding: becomes important to consumers and firms Labor saving products (refrigerators, canned, frozen foods) become important as more women work Retail outlet options increase (supermarkets, departmental stores) and consumption patterns change (bulk-buying) Developmental Effects on Consumer Behavior Purchasing roles change from patriarchal to egalitarian as families acquire purchasing power and buy more products Sources of information change from personal to commercial media Branding: becomes important to consumers and firms Labor saving products (refrigerators, canned, frozen foods) become important as more women work Retail outlet options increase (supermarkets, departmental stores) and consumption patterns change (bulk-buying) Merchandising and packaging: viewed as important and become primary marketing tools Developmental Effects on Consumer Behavior Purchasing roles change from patriarchal to egalitarian as families acquire purchasing power and buy more products Sources of information change from personal to commercial media Branding: becomes important to consumers and firms Labor saving products (refrigerators, canned, frozen foods) become important as more women work Retail outlet options increase (supermarkets, departmental stores) and consumption patterns change (bulk-buying) Merchandising and packaging: viewed as important and become primary marketing tools Means of purchase: credit/debit replace cash Industrialization, Modernization, and Integration into the Regional and Global Economies Globalization Process • Stage 1: Traditional Pre-industrial Societies: communistic, self-sufficient, agricultural, autocratic, culturally heterogeneous, hereditary social classes, traditional manufacturing Industrialization, Modernization, and Integration into the Regional and Global Economies Globalization Process • Stage 1: Traditional Pre-industrial Societies • Stage 2: Industrialization and Modernization Processes: development of: market forces system; regional then national markets as infrastructure develops; government health and welfare systems, financial systems, democracies, national cultures, modern factory methods Country Development, Industrialization, Modernization, and Integration into the Regional and Global Economies • • Stage 1: Traditional Pre-industrial Societies Stage 2: Industrialization and Modernization Processes • Stage 3: Postindustrial Economies: mature, service-oriented economies, internationally involved, politically, economically very competitive; large, specialized firms— customer-oriented Country Development, Industrialization, Modernization, and Integration into the Regional and Global Economies • • • Stage 1: Traditional Pre-industrial Societies Stage 2: Industrialization and Modernization Processes Stage 3: Postindustrial Economies • Stage 4: Regionally and Globally Involved Societies: members of trade blocs and global bodies; source and sell worldwide—deeply involved in global economy; regional media, products, currencies, cultures, infrastructures Obstacles to Economic Development Industrialization Process Impediments Population migration problems:over-urbanization; towns are melting pots Obstacles to Economic Development Industrialization Process Impediments Population migration problems:over-urbanization; towns are melting pots Worker frustration: low-paid unskilled work Obstacles to Economic Development Industrialization Process Impediments Population migration problems:over-urbanization; towns are melting pots Worker frustration: low-paid unskilled work Worker adjustment problems: rural lifestyles vs. regimented factory disciplines Obstacles to Economic Development Industrialization Process Impediments Population migration problems:over-urbanization; towns are melting pots Worker frustration: low-paid unskilled work Worker adjustment problems: rural lifestyles vs. regimented factory disciplines Geographic Impediments Resource impediments: lack of consistent agriculture, energy sources, minerals Obstacles to Economic Development Industrialization Process Impediments Population migration problems:over-urbanization; towns are melting pots Worker frustration: low-paid unskilled work Worker adjustment problems: rural lifestyles vs. regimented factory disciplines Geographic Impediments Resource impediments: lack of consistent agriculture, energy sources, minerals Geographic location: affects climate, infrastructure development, trading route access Obstacles to Economic Development Industrialization Process Impediments Geographic Impediments Ethnic and Linguistic Composition: Common languages must develop for economic development/coordination to occur; dominant ethnic language, colonial language Obstacles to Economic Development Industrialization Process Impediments Geographic Impediments Ethnic and Linguistic Composition: Common languages must develop for economic development/coordination to occur; dominant ethnic language, colonial language Institutional Resistance to Change Political Resistance: incumbent politicians resist change Obstacles to Economic Development Industrialization Process Impediments Geographic Impediments Ethnic and Linguistic Composition: Common languages must develop for economic development/coordination to occur; dominant ethnic language, colonial language Institutional Resistance to Change Political Resistance: incumbent politicians resist change Economic Resistance: privileged families, firms (SOEs) Obstacles to Economic Development Industrialization Process Impediments Geographic Impediments Ethnic and Linguistic Composition: Common languages must develop for economic development/coordination to occur; dominant ethnic language, colonial language Institutional Resistance to Change Political Resistance: incumbent politicians resist change Economic Resistance: privileged families, firms (SOEs) Cultural Resistance: religion (to westernization); education (humanities-based versus science/technology); rigid class system (old money); ethnic or tribal divisions Obstacles to Economic Development Industrialization Process Impediments Geographic Impediments Ethnic and Linguistic Composition: Common languages must develop for economic development/coordination to occur; dominant ethnic language, colonial language Institutional Resistance to Change Political Resistance: incumbent politicians resist change Economic Resistance: privileged families, firms (SOEs) Cultural Resistance: religion (to westernization); education (humanities-based versus science/technology); rigid class system (old money); ethnic or tribal divisions Key Points Economic development causes changes in country political, economic and cultural institutions, and in individual values, attitudes and behaviors Key Points Economic development causes changes in country political, economic and cultural institutions, and in individual values, attitudes and behaviors Technology transfers by international corporations contribute to modernization and westernization Key Points Economic development causes changes in country political, economic and cultural institutions, and in individual values, attitudes and behaviors Technology transfers by international corporations contribute to modernization and westernization Individuals migrate to become part of the modern Key Points Economic development causes changes in country political, economic and cultural institutions, and in individual values, attitudes and behaviors Technology transfers by international corporations contribute to modernization and westernization Individuals migrate to become part of the modern society Economic development causes change in industry demand and supply chain Key Points Economic development causes changes in country political, economic and cultural institutions, and in individual values, attitudes and behaviors Technology transfers by international corporations contribute to modernization and westernization Individuals migrate to become part of the modern society Economic development causes change in industry demand and supply chain Corporate behaviors alter to emphasize profit-oriented, competitive behaviors, and participative corporate cultures Key Points Economic development causes changes in country political, economic and cultural institutions, and in individual values, attitudes and behaviors Technology transfers by international corporations contribute to modernization and westernization Individuals migrate to become part of the modern society Economic development causes change in industry demand and supply chain Corporate behaviors alter to emphasize profit-oriented, competitive behaviors, and participative corporate cultures Consumer behaviors change as companies become more sophisticated and aggressive in their marketing efforts