The Development of Information Technology Industry
Essay Preview: The Development of Information Technology Industry
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For such of actions that certain developed nations progressively moved them production offshore and also outsourcing from manufacturers in developing nations, the reason of those actions is due to the cost of importing the components from developing nations is cheaper than producing such components in developed nations. The international theory may be described as comparative advantage theory. David Ricardo (1817) mentioned comparative advantage theory that it makes sense for a country to specialize in the production of those goods that it produces most efficiently and to buy the goods that it produces less efficiently form other countries. That means a nation can produce the components at a lower cost than other nations. And developed nations manufacturers are only focused on producing the highest value components, and developed nations manufacturers are a focus on producing the basic components.
Because of the production cost was decreased, computer hardware companies had surplus capital to invest in other information technology developments and improvement. Also, the low unit price of the final product would result in an increase the sales volume and demand in the United States. The economy of developed nations would grow at a faster rate because the production of information technology was changed to developing nations.
Some of the basic hardware components were outsourced to foreign manufacturers, the foreign manufacturers would join a favorable balance of trade. Then developed nations manufacturers were producing the final product and arranged the trade with foreign countries that made the export higher than the import during 1990s-2000s. The productivity of major manufacturers grew as reduced a unit price of information technology hardware. Also, an increase in sales was developed the economic development and resulted in accumulated a huge gross domestic product(GDP). That means if such of information technology manufacturers improves its quality or function, then GDP in developed nations will also be raised.
In addition, such as moving the production of hardware offshore increased the job opportunities of developed nations. The improvement of information technology has resulted in a high demand for related industries and created a lot of related jobs, such as computer software engineers and other relative based services. The unemployment of those developed nations would be reduced and also improved a great contribution to its economy. The implications of this trend for economic growth in developed nations have they have obtained the advantage to produce more technical products and upgrade their technology skills during this period.
Finally, the profit was moved offshore when developed the production of hardware components in other countries. When the developed nations want the profit backed by their nations, it is difficult to arrange under the government’s