IT-BPO sector plays a major role in economic development
Economic development happens when technological change, which is when economies learn to do things better, allows a subsistence economy to produce surplus and trigger a period of rapid industrialization.
Economists have explained technological change through the idea of experiential learning or “learning by doing” where it is the people and organizations who actually learn how to do things. This accumulated knowledge and skills learned by people is called human capital which have increasing returns to scale unlike physical capital whose returns are constant.
From this realization, present-day economists like Ricardo Hausmann, Jason Hwang, and Dani Rodrik (2005) have argued, “what you export matters.” Exporting goods speed up economic development as the local economy is granted access to richer economies and it allows people to learn more by doing more as they need to adhere to higher international standards.
The same phenomenon is seen in the IT-BPO industry. Workers and firms in the industry need to have skills and processes raised to international standards to survive in the competitive global market.
In terms of short-term economic development gains, the IT-BPO has triggered a multiplier effect in the local economy on commercial real estate development and consumption spending.
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