Introduction

The global economic landscape is constantly changing. A rapid growth (a rate of almost 5% per year in real terms) of global export of goods and services has been changed global economics between 1980 and 2007. It has to be noted that most of this growth in absolute values has been accounted for the high-income economies; however, the developing economies increased even further with an average of 6% rose in their global exports within the same timescale (Wall et al, 2009). This in turn signifies that the exports to GDP ratio increased much faster in the developing economies and now exceeds of the high-income economies figures. With the monstrous growth of China and India, it is important to understand the key factors which driving the dementedly required economic growth (Adekola & Sergi, 2007).

Another important factor is the increase of foreign direct investment (FDI) on a global scale, which has grown with five times in the same period of 1980 – 2007. It can be seen at Appendix 1 that the developing economies saw a continuous growth of inward FDI, following the dip around 2000 (Wall et al, 2009, p. 2). Particularly China had experienced substantial inward investments, especially after 2001 when China joined the World Trading Organization (WTO). The global FDI inflows sharply declined in the years of 2001-2003 by 41%, 26% and 10% respectively; however, China saw an increase in their FDI inflow at the same period by 15%, 13% and 14% (Whalley, 2011). This flow of FDI to china perhaps can justify the Chinese company’s ability to break the appropriability theory, which is the idea of gainsay the access to resources for competitors (Daniels et al, 2012). Another motive for reach the agreement with investors is to gain knowledge, as Daniels et al, (2012) reveals that Chinese authorities allowing foreign investment in exchange for technology share.

The development of the emerging economies also a result of the pursuit of low cost labor to keep competitive advantage. Rugman & Collinson (2011) account for that cost is one of the primary concern in manufacturing of goods and services. To control the costs, manufacturers mainly looking into four areas, namely: increasing the efficiency of their production processes, tap low-cost labor sources, development of new methods to cut costs and costing products not on an individual basis but as a part of a portfolio of related goods (Rugman & Collinson, 2011, p. 374). This approach has been referred by Griffin & Pustay (2012), as cost leadership which can be achieved by systematic cost reduction of production and manufacturing, and it should form part of the firm’s international marketing and business strategy. Whalley (2011) argues that the primary reason for large inward FDI to China was the access to high quality low cost labor, which can be used to maximize profits with the combination of foreign technology.

As of Seitz & Hite (2011) technology is what makes economic growth and social change happen, it also help to make things better and easier for the society. However, on the other hand technology cannot change the environment without affecting other parts of it (Seitz & Hite, 2011). Both of the previous ascertainment been echoed by Smith (2009), whereby he is argued that the race to use technology to stimulate economic growth, can easily blind us from the risks that technological progress can cause in the environment. This piece of work is to asses the technological advantages, focusing on energy as a critical technology area, and how it effects the global economics, how it can change the future of the worlds population, particularly the developing countries involvement due to their strategic position in global economics.

1. Technological change in Global Economics

1.1. Technological change in the 21st century

The 21st century introduced inevitably the biggest changes, developments in technology, and the effects of organizations. In Brooks, Weatherston, & Wilkinson (2010) reasoning, the use, or lack of use, of technology has a strong influence upon the competitiveness of firms, sectors and nations. Nevertheless, Seitz & Hite (2011) highlights that the inappropriate use of technology by the western, developed nations can cause harm to the globe, and the developing countries should consider an intermediate use of technologies. Both reasoning stresses the importance of technological development.

1.2. Research and Development (R&D)

One of the important elements of Vernon (1991) International Product Life Cycle (IPLC) theory is technology, whereby it is a critical factor in the development of new products. As it can be seen in Appendix 2, the IPLC has three stages, new, mature and standardized stage. It helps to explain why a nation’s export product ends up in an import position through its maturity, due to the production movement from the parent country to the scene where the cost of production is the lowest (Rugman & Collinson, 2011). In the treatise of Mian (2011), China’s immense progress in the building of its science and technology capabilities, resulted of being the second biggest economy in the globe. In 2004 China become the top country, in terms of absolute number of technical and R&D personnel (Mian, 2011, p. 330). This capability is acted as a magnet for big global companies to invest in China.

1.3. Robotics/automation as a cost reduction factor

To justify the investment into robotics some economic factors has to be considered. Robots present labor cost reduction (Appendix 3), increase productivity with reduction of production time, less waste, robots also can perform hazardous tasks. All of these elements can realize major cost reductions and results in economic gains such as competitive advantage (Hunt, 1990). On the other hand, automation can have negative effects on the life of individuals, whom jobs may become redundant resulting in sociological recidivation. As Smith (2009) argues that science and technology studies derive from social activities and science is devoid of people, automation can be seen as a reflection of this theory.

2. Energy dilemmas

2.1. Energy demand

The advancement of technology and the ever-increasing importance of economic growth have significantly increased the global demand for energy. A differentiation of geographical areas in this demand is inevitable, as more developed areas of the globe require more energy, and subsequently can affect the climate due to the high use of fossil fuels to meet the demand. As Bradshaw (2013) demonstrate 75% of carbon dioxide emissions are related to energy production or consumption. Sioshansi (2011), has used Maslow’s pyramid of needs to asses the need for energy by the society as a whole, and he concludes that the importance of energy production and consumption is the primary need for the modern civilization. Technological changes and development was a primary source for the creation of new energy absorbing devices, which in turn enlarge the energy demand. Securing this demand is the biggest challenge that the humankind currently facing. Seitz & Hite, (2011) quotes, that predictions suggest that largest increase in demand for oil will come from big developing countries such as India and China, not from the West. China particularly fight a battle to be able to supply the increased demand of energy, in a moderate climate harming way (Seitz & Hite, 2011). However China’s energy consumption prevails (almost 60%) by the industry sector (Appendix 4), which adds significantly to the global climate changing effects, dominated by China (Sioshansi, 2011).

2.2. Climate policy

According to the International Energy Agency (IEA, 2011), the “BRICS” economies, which refer to Brazil, Russia, India, China and South Africa as emerging economies, accounted for 33% of the global energy use and 37% of CO2 emission from energy use (Bradshaw, 2013, p. 120). The study also highlights that, China and India are the major players from this group towards an increase in both energy use and greenhouse gas emissions. A debate in the studies of Gallaraga et al, (2011) questions the possibility of having economic growth, with less ecological impact to the globe. As of Beinhocker et al, (2011) a twofold extenuation in emissions and sustain the growth, would require a tenfold increase in carbon productivity. Thus the possible change in carbon productivity can be achieved by the change in the mix of the fuel source for energy supply. Three main objectives been determined by the Energy Directive 209/28/EC, namely to reduce green house gas emission by 20%, to reduce energy consumption by 20%, and raise the renewable energy production by 20% (Gallaraga et al, 2011, p. 52). But an interesting study should be considered here; the so called Green Paradox (Sinn, 2008). This study is analyzing the Kyoto Protocol limits, and argues that if the suppliers are not following the decrease in demand the price of carbon can be reduced. Which then can be lead to a higher consumption, or a speed up exploitation in the hope of a quicker profit increase, which ends up in an even worse ecological situation. This realization been echoed by Sioshansi (2011), whereby he is concluded it is not the case that pro-environment policies always lead to rapid development of environmental friendly technologies (Sioshansi, 2011, p. 33).

3. Ecological and economic impacts of energy sources

3.1. Fossil fuels

As it can be seen in Appendix 5, the current energy system has three primary energy sources, fossil fuels, nuclear fuels and renewable energy sources (Sioshansi, 2011). Fossil base fuels have maintained the industrial revolution and still the basis of many emerging economies energy supply. According to Bradshaw (2013) in 2006 the three main fossil fuels of coal, gas and oil accounted for 83.3% of the global primary energy supply as it can be seen in Appendix 6. The energy transition paradigm (Appendix 7) should point to a change from the fossil fuels to and ecologically preferable renewable base, however most of the emerging economies will only go through the previous transition from biomass (mainly wood) to fossil fuels. Which then leading to a question of, would the emerging economies are willing to use less fossil fuels to drive their economic growth? A positive exemplary of the Chinese state with its energy policy is the key in the behavioral changes required, stated that China set a target of quadruple its GDP while only doubling energy consumption (Sioshansi, 2011).

3.2. Renewable energy sources

As of Sorenson (2010), renewable energy sources currently provide about 25% of the energy supplied (S²renson., 2010, p. 3). In Appendix 8, the different type of renewable energy sources can be seen, from biomass to wind and solar energy. Sorenson (2010) also highlights that renewable s from a business point of view is not as interesting as the commercialized world of conventional energy sources (i.e. energy trading, etc.). It has to be emphasized that governmental incentives not always attract investment into renewable s, which then could slow down the positive effects of the usage of renewable energy sources. A study by Dahlquist (2013), concluded that the use of biomass fuels compared to coal, has a significant effect on green house gas emissions, nevertheless of reduction in thermodynamic outputs. Freris & Infield (2008) highlights as one of the advantages of renewable s is virtually nonpolluting, and more suitable for developing countries due to technological expediement. The exploitation of materialized energy sources will end, as of the current knowledge of available resources, and renewable s should replace them, however innovation is key to utilize all of the barriers of economic will.

3.3. Nuclear

Nuclear resources are no more exuberant than the fossil base resources, as of Sorenson (2010), new technologies are not in development, due to cost, safety and capacity factors. Other academics quoth that nuclear energy can be competitive against coal and gas generation, especially with the benefit of CO2 reduction (Gallaraga et al, 2011, p. 478). On the other hand, the fusion technology is still holds uncertainties around radioactivity problems, also the confinement structure for material handling is still not existing. Bradshaw (2013) account for the different environmental problems that nuclear power holds, especially after the Fukushima disaster some will query the benefits of the low carbon energy it might deliver.

4. Conclusion

This short study has focused on the technological changes that can play vital role in the global, and particularly the emerging economies growth. From an energy perspective, the study tried to highlight the two major constraints, namely the economic and ecologic issues that surround energy supply and demand. A conclusion of the importance of R&D in technological development can be determined. Particularly in China, it was a key driver for inward investment.

The focus on energy supply security is possibly only one side of the coin; the other is ecological impacts of exploitation and use of energy resources. Environmental friendly energy supply could cost more and be more expensive to deliver. In fact, the challenge is not just secure sources, but the economic and social consequences of the higher energy price around the globe. It is important to note that every energy source has its ecological impact, and the ignorance that the humankind have been shown towards the environmental impacts of energy production must be put forgotten, and a cooperative effort should be commenced to develop a sustainable future energy supply. However, the current energy-related emission is in line with the economic development (especially the emerging economies fast pace development), which in fact is in contrast of the previously described requirement. The emerging economies can achieve emission reductions with a rapid, greater growth of their economies than their energy needs, as it can be seen in China’s growth policy. Thus, a suggestion of an alternative growth model based on renewable energy should be applied, for the emerging economies.

A conclusion is hardly being developed by these ‘hard-core’ factors; rather a question could have been framed here: What does the globe as a whole with its people to (or will) choose: the economic growth, to slow down the increase of the population, or the ecological stability to save the environment of our sensitive ‘Globus’?

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Appendices

Appendix.1 FDI inflows 1980-2007

Appendix.2 International Product Life Cycle

Appendix.3 Labour cost reduction of robotics

Appendix.4 Energy demand by sector in China and USA

Appendix.5 Components of the Contemporary energy systems

Appendix.6 Energy mix in 2006

Appendix.7 Energy Transitions

Appendix.8 Renewable Energy sources