Institutional Investor | April 2, 2014
Investors, economists and financial market participants like indicators they can quantify: inflation, growth, earnings, unemployment and so on. But often the most important factors in future development are unquantifiable and unpredictable. Technology is at the top of that list.
Much of the growth in corporate earnings and economic output since the Industrial Revolution can be explained by advances in technology and knowledge. Humans have streamlined the process of converting scientific knowledge into commercial enterprises that improve the human condition. This development has led to the greatest era of human prosperity in recorded history. Many economists consider technology and knowledge collectively as the fourth factor of production, after land, labor and capital.
The growth and development in emerging markets can largely be explained by the diffusion of technological know-how from the West to the rest. There are tangible examples of the economic power of technological advancement and distribution throughout the emerging world, from the spread of mobile telephones in Africa to the development of innovation hubs in China and to the creation of a deep service and technology economy in India.