**5. Changing role of technological system: from driving to impeding the global economic growth**

The global crisis has interrupted the spectacular economic growth in 2008. As many experts agreed, the main causes of the beginning economic downfall were emerged in the financial sector. That is why the economic crisis was denoted as the global financial crisis. We have quite different standpoint on the nature of the global economic crisis, explaining it by the technological reasons. Generally speaking, large companies as the main actors in the global economy are not technological drivers any more, as we noted it before. The theoretical conceptualization of that fact is yet insufficient, that is why we are quoting the participants of the Davos forum 2017, who had expressed a strong concern about the emerging "shortemism" in the global economic affairs, which is essentially inconsistent with the long-term nature of the technology-driven development. We would like to quote the British businessman Martin Stuart Sorrell, who has evaluated the technologies, applied by the global companies as: "big companies made incremental, but not fundamental innovations". Sharing that vision on large business the Ivorian businessman TidjaneThiam says: "Once you became big your natural impose is to be incrementalist and conservative and protect your position"6 . Therefore, the most probably the large multinational companies has been acting today as the opposition rather than supporters to technological change of society.

Among the other reasons, restricting the further technological development and therefore negatively effecting the growth of global economy are the following:


**Figure 4.** Russian export breakdown (as of 2013). Source: Federal Customs Service. Renaissance capital. US global

Technological Reconstruction of the Global Economy http://dx.doi.org/10.5772/intechopen.75096 15

**Figure 5.** World consumption of primary energy by energy type. Source: Peak oil. http://en.wikipedia.org/wiki/Peak\_oil.

Investors. http://www.valuewalk.com/2016/06/brexit-sanctions-russia/.

**3.** The general global economic biases toward increasing role of raw, specifically energy, resources in trade, which is depicted on **Figure 5**.

In 2015 the crude oil sales overflow any other trading items, reaching \$786.3 billion., the third position in the global trade was occupied by the processed petroleum oil, estimated as much as \$605.9 billion. The car sales, estimated as \$672.9 were on the second position7 .

<sup>6</sup> Davos 2017 - Size Matters: The Future of Big Business https://www.youtube.com/watch?v=0dT3D3Ip7xo&t=370s 7 List of countries by export. https://en.wikipedia.org/wiki/List\_of\_countries\_by\_exports

in the global economic affairs, which is essentially inconsistent with the long-term nature of the technology-driven development. We would like to quote the British businessman Martin Stuart Sorrell, who has evaluated the technologies, applied by the global companies as: "big companies made incremental, but not fundamental innovations". Sharing that vision on large business the Ivorian businessman TidjaneThiam says: "Once you became big your natural

most probably the large multinational companies has been acting today as the opposition

Among the other reasons, restricting the further technological development and therefore

**1.** The deindustrialization of the leading economies, which is denoted in the increasing share of services in the GDP and employment. For example, when the global economic crisis starts in 2008 the share of services in the GDP composed: over 80% in the United States, about 69% in Germany, 77.4% in France and 72.3% in Japan. It means that manufacturing production, whether it is knowledge-intensive or not, has been losing its common ground. Among many circumstances are increasing cost of labor, favoring consumption rather than production, stringent ecological requirements elaborated for the manufacturing production, import-favorable exchange rate of the national currencies in

**2.** The "Dutch disease phenomenon", affected Russia, Saudi Arabia, Venezuela and the other oil-dependent countries. The Russian economic drama emerged since the early 1990th, when the market-driven insight on the way the country should follow, has ignored a substantial pool of R&D capabilities, accumulated during the Soviet times. As a result today the Russian dependence on oil and natural gas is enormous: 33% of total export, refined oil and gas products estimated as 24% of total export and natural gas estimated as 14% of total export (three articles in sum composes 71% of the total export), which is depicted in **Figure 4**. It is worth remembering that the second half of the twentieth century was marked by a strong technological confrontation between the United States and the USSR, enforcing the worldwide move forward in science, technologies and education. When Russia, as the main USSR successor and one of the leading global technology race participant, has left its

**3.** The general global economic biases toward increasing role of raw, specifically energy, re-

In 2015 the crude oil sales overflow any other trading items, reaching \$786.3 billion., the third position in the global trade was occupied by the processed petroleum oil, estimated as much

Davos 2017 - Size Matters: The Future of Big Business https://www.youtube.com/watch?v=0dT3D3Ip7xo&t=370s

as \$605.9 billion. The car sales, estimated as \$672.9 were on the second position7

List of countries by export. https://en.wikipedia.org/wiki/List\_of\_countries\_by\_exports

. Therefore, the

.

impose is to be incrementalist and conservative and protect your position"6

rather than supporters to technological change of society.

disposition it negatively affected the other countries.

sources in trade, which is depicted on **Figure 5**.

many leading countries.

14 Globalization

6

7

negatively effecting the growth of global economy are the following:

**Figure 4.** Russian export breakdown (as of 2013). Source: Federal Customs Service. Renaissance capital. US global Investors. http://www.valuewalk.com/2016/06/brexit-sanctions-russia/.

**Figure 5.** World consumption of primary energy by energy type. Source: Peak oil. http://en.wikipedia.org/wiki/Peak\_oil.

**4.** The escalation of military spending and defense procurements represents not the last factor, undermining the further technological development and growth in global economy. **Figures 6** and **7** depict the military spending in the world, specifically fast growing in

Technological Reconstruction of the Global Economy http://dx.doi.org/10.5772/intechopen.75096 17

The growing militarization of the economies means that commercial technologies are gradually replaced by the military, the state has been replacing the market in the processes of creation and application of new technologies and the companies are forced to compete for the state military contracts rather than market share and cost reduction. Besides, the cost of the new type of armaments is growing rapidly, negatively affecting the state budgets, which has been undermining the financial stability in the military dependent countries. In his article "The Jet That Ate the Pentagon: The F-35 Is A Boondoggle. It's Time to Throw It In the Trash Bin (excerpt)" Winslow Wheeler writes: "The F-35 will actually cost multiples of the \$395.7 billion cited above. That is the current estimate only to acquire it, not the full life-cycle cost to operate it. The current appraisal for operations and support is \$1.1 trillion - making for a

Therefore, the modern economy, flourished on a substantial technological base, became

The challenges, encountering the global society, have been steadily multiplying in scale and variety: escalation of trade wars, financial flexibility, disintegration processes in Europe, migration crisis, militarization of economies, global warming – these and many other problems have been undermining sustainable life of human beings. To cope that challenges the governments, pursuing the monetary paradigm in regulation, are spending more from their budget (at least mentioning 50 billion pounds, which the UK will pay for their leave the EU), rather aggravating than improving the state of affairs. The entire global system has been badly working provoking manifold disruptions as it is listed above. What would be more useless than the efforts focused on improvement the obsolete, ill working politico-economic system? Let us recall here the Simon Kuznets statement, which he made in his Nobel lecture in 1971: "… the changing course of economic history can perhaps be subdivided into economic epoch, each identified by the **epochal innovation** with the distinctive characteristics of growth that it generates" ([14])<sup>8</sup>

Epochal innovations and epochal transformation of the global economy requires new knowledge, new mindsets and new individuals, pursuing the novelty in theory and practical decision makings. When Charles Jones explains economist "as a laboratory scientist, setting up a model…" [2] we could not agree. Economics in accordance with our perception is a kind of

S. Kuznetc explains the epochal innovations as the following: "The major breakthroughs in the advance of human knowledge, those that constituted dominant sources of sustained growth over long periods and spread to a substantial part of the world, may be termed epochal innovations". From: Simon Kuznets. Modern Economic Growth: Findings and

Reflections. http://www.nobelprize.org/nobel\_prizes/economics/laureates/1971/kuznets-lecture.html

.

grand total of \$1.5 trillion, or more than the annual GDP of Spain" [13].

**6. Creating new technological system in twenty-first century**

unfriendly for the further technological development.

China.

8

**Figure 6.** World military expenditure, 1988–2016. Source: World military spending: Increases in the USA and Europe, decreases in oil-exporting countries. https://www.sipri.org/media/press-release/2017/world-military-spending-increasesusa-and-europe.

**Figure 7.** China published military budget. Source: Military budget of China https://en.wikipedia.org/wiki/Military\_ budget\_of\_China.

**4.** The escalation of military spending and defense procurements represents not the last factor, undermining the further technological development and growth in global economy. **Figures 6** and **7** depict the military spending in the world, specifically fast growing in China.

The growing militarization of the economies means that commercial technologies are gradually replaced by the military, the state has been replacing the market in the processes of creation and application of new technologies and the companies are forced to compete for the state military contracts rather than market share and cost reduction. Besides, the cost of the new type of armaments is growing rapidly, negatively affecting the state budgets, which has been undermining the financial stability in the military dependent countries. In his article "The Jet That Ate the Pentagon: The F-35 Is A Boondoggle. It's Time to Throw It In the Trash Bin (excerpt)" Winslow Wheeler writes: "The F-35 will actually cost multiples of the \$395.7 billion cited above. That is the current estimate only to acquire it, not the full life-cycle cost to operate it. The current appraisal for operations and support is \$1.1 trillion - making for a grand total of \$1.5 trillion, or more than the annual GDP of Spain" [13].

Therefore, the modern economy, flourished on a substantial technological base, became unfriendly for the further technological development.
