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Major growth trend in technology and innovation worldwide - prediction

Published:Friday | July 17, 2015 | 7:00 AMJenni Campbell

ADDIS ABABA, Ethiopia:

Countries poised for technological and information advancement could enjoy unprecedented levels of growth in the next decade if predictions from global financial experts are realised.

The experts have identified a major growth trend worldwide in technology and innovation. They say knowledge-intensive financial flows are gaining importance relative to labour-and capital-intensive flows.

The contribution of the Internet to the gross domestic product in some countries is already larger than many other sectors, e.g. agriculture, even though a wide gap remains between developed and emerging economies.

While the realities on the ground in most countries remain uncertain, the financial experts who studied and prepared material for this United Nations Third International Conference on Financing for Development in Ethiopia's capital city say prosperity is on the rise generally and more than two billion people are expected to join the consuming class by 2025, in conjunction with the spread of technology.

economic strength

They went further to predict that, parallel to the spread of technology, there would be a shift of economic strength from the West to the East and the South, as well as increasing urbanisation globally.

Already, the increasing presence and power of China in the West is well noted. India has also taken major leaps in technological advancement.

Chinese investment in Jamaica and the wider Caribbean region underscores their intent to establish and take full advantage of market opportunities in the West.

Further predictions are that global flows of goods, services and finance would double, at least by 2025.

Data from World Economic Outlook illustrate major shifts in the global financial trends since 2002. India and China had experienced very strong economic growth rates, while some low-income countries also have grown significantly since the financial crisis of 2008.

Global economic integration had advanced and private flows to developing countries had risen considerably, despite the dip during the financial crisis. Developing countries - especially emerging markets - could access private capital markets at better rates than 15 years ago. It is, however, predicted that a return to high growth rates generally was unlikely even though the outlook was not as uncertain for low-income countries.

The challenge would be to ensure inclusive growth and job creation as well as manage the pressure on resources.

It was observed that while global financial flows had generally increased since the 2008 crisis, official development assistance to least-developed countries had fallen. Private flows were not allocated to the countries and sectors most in need.

In some countries, support for social programmes and the safety net must come from central government as global funding moves elsewhere. Last week, local non-governmental entities which provide support for battered women and girls reported that they had to scale down their offerings because of a decline in contributions and grants from partners.

The uncertainties in the international financial sectors have scared institutional investors, who were often looked to as a solution for financing long-term investments, into generally investing through short-term intermediaries, with short-term incentives.

The remedy presented by the financial experts here is for countries to blend private-and public-sector sources of finance. However, they pointed out that countries most in need frequently lack the capacity to build and manage these partnerships successfully.

Pumping good money into frail and shady systems will only spell disaster for all, the experts warned, as they argued that there is a direct correlation between good governance and growth.