The Great Transition - Is technological change shrinking the demand for physical capital?

First Sentier Investors

First Sentier Investors

The shape and value of capital is changing. Technological advancements now allow consumers to access markets more cheaply in pursuit of products and services which better serve their needs. This shift from homogeneous to personalised, high quality and competitively priced products and services has begun to transform the production side of the economy. The value of capital is being eroded- we are doing more with less and what is still deemed valuable must now be used more efficiently in order to compete. Simply, technological change shrinks the demand for physical capital because competition emerges rapidly without the need for a substantial physical footprint or established products and services. An abundance of cheap information now allows much smaller organisations to enter and effectively compete in this more 'personalised' market. In his latest research series “The Great Transition” CFSGAM's Senior Analyst James White highlights the erosion company or firm power as capital becomes less capable of adding value to this new 'personalised' model which is being driven by the market, not by management. (VIEW LINK)


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