Wednesday, August 19, 2009

The Economics of Technological Development

I was leafing through the latest issue of the Economist and I came across a startling discovery. Apparently in North America a lot of people pay for incoming calls! This seemed to be a throwback to the archaic days when cell phones were a luxury. In India this thought is now absurd (unless you are on roaming.)

This made me start thinking, its not that man fails to progresses technologically. It is how fast mankind adopts new technology, how fast it becomes economically viable for a technology to percolate to the grass roots level of society.

We often hear the whisper of next generation fuel sources, electric cars and hybrids and though they have started testing these cars in the US, it is far from becoming a reality for the common man. We are still dependent on fossil fuels now matter how long strides we have taken in alternative fuel sources. It is not that we lack the know-how as the human race. It is because we lack the economics to grow fast enough. For man to innovate he needs to research and that costs time and money. Basic economics. 101 - exhaustive research and effort is expensive hence adopting a technology is also expensive. Yes we can delve into marketing mumbo jumbo about early adopters and product pricing and how this is profitable for the companies but I won’t touch upon that here.

The question I ask you is take Arthur C Clarke and his vision of the future. 2001 has come and gone and 2010 is at our doorsteps, yet man fails to have achieved space travel on the scale Clarke envisioned (the Virgin Galactic Space Ship One is a step in the right direction). Similarly how is the human race going to progress technologically in leaps and bounds when cutting edge technology is under wraps because of defence applications or other commercial applications is so expensive. Robotics is an excellent example. There are so many intelligent robotic toys – Robo Sapiens being a popular toy being sold. Yet we can’ t afford to have a robot in our homes even if Honda started manufacturing them as butler or nannies an I-Robot future is still very distant.

The solution? Your guess is as good as mine. Where is our next big disruptive innovation that’s going to solve this technological and economical problem? Should we be entering into the next generation of technological communism? In a sense that’s what Open Source is all about isn’t? Developing things faster in a free manner thereby reducing the burden on the end consumer. For now I can just be glad that tariffs based on technology, as in the case of cellular phones is definitely looking better in India than overseas.

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