Impact of Weightless Capital on the Pattern of Economic Growth and Employment

The defining feature of current world economic growth is the increasing scope of weightless capital in the composition of total output. It is currently debated among economic pundits to prophesy that the weightless capital is dramatically altering the structure of the world economy by increasing the higher level of economic growth in the era of liberalization and globalisation. Furthermore, It is also argued, new technologies will alter the structure and composition of total output. This may lead to an inexorable rise in unemployment in the world. Although there is not sufficient long-term empirical evidence that unemployment, at the aggregate level at least, is caused by technological changes resulting due to the impact of weightless capital. Although in the short run, there may be increase in unemployment but this is purely because of structural adjustment. In India's case this may not be because of only increasing role of weightless capital but presence of certain other factors vis-a-vis lesser investment in agriculture etc. Even though globalized and weightless activities have become increasingly important, they do not pose insurmountable threats to the world economy. The overall message may be an optimistic one: inequality and unemployment need not rise in the face of competition from the developing world in response to technological change. However, government policy can play a major role in promoting adjustment to change.