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Innovation can be defined as building something that is responsible for making a particular product or process more efficient. The outcome may vary from a price cut-down that is further passed on to the customers later on or it can be a rise in the speed at which a particular business functions.

Ultimately, innovation can be held responsible for the overall social and economic development and help in increasing the standard of living as well. At the moment, equity crowdfunding is the one these innovations.   

Economists, across the world, has identified the gap between the rich and the poor as a global issue both nationally and globally. Alas, seeing the growth in the technology sector this gap is only going to increase.

Most of the population, across the world, comprise of people living in underdeveloped economies where around 4 billion are under poverty line.

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It has become difficult for the underdeveloped economies to be competitive seeing the globalisation, not having knowledge of how to keep pace with the advanced technology, and lack of infrastructure.

Let us take the example of the United States, where the income growth of the middle class cannot be considered as prosperous. Statistics from Bureau of Economic Analysis and an article of New York Times, a decline has been noticed in America’s middle-class households’ median annual income since 1967.

In 1960, 50 per cent of the American households were classified under middle class; while most of the households have moved on and attained the status of upper-class, but still the difference between the growth trajectories of the both the classes has increased considerably.

The future of equity crowdfunding and the impact that it is going to have on the world 

With the help of crowdfunding, individuals are free to pledge capital on anything. This can be done either offering monetary support to the less fortunate or funding a company that is making efforts in improving energy efficiency in America.

Since the genesis of the computer age, the global economy has witnessed a significant growth. Advancements in the field of technology have brought about wealth inequality between the richest and poorest countries. Crowdfunding can prove beneficial in bringing a change in the quality of lives lead by the less fortunate.  

A tech underclass is in the making in which only a few technologies are capable of gaining a particular income level and countries. This means that both the individuals and countries have to find out a way in order to flourish the innovation that will offer technological tools to other countries so that everybody gets benefited from the prospect of innovation.

In countries like Canada, America, South Korea and New Zealand, along with the European Union, equity crowdfunding has gained traction as a substitute investment method along with donation-based crowdfunding. Crowdfunding encourages investment into the developing countries via startups and social causes, which in turn generates a mentality of welcoming innovation.

One of the best ways in which crowdfunding has proved beneficial for the developing countries is via product known as Gravity Light. This has provided an effective solution to around 25 per cent of the global population that are not enjoying the facility of electricity.

The goal was to raise around US$50,000 that will help fund the venture but it ended up raising US$400,590. This shows the strength of online platforms that facilitates an individual to pledge capital.

The best thing about the device is that there is no need of electricity and sunlight, this makes the device more economic for the needy population. The effect of a sustainable light source can prove beneficial for all those families which are not having the access to electricity.

Also Read: Ex-Malaysian PM Abdullah Badawi launches world’s first waqf-based crowdfunding platform

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During Arab Spring in Egypt, the phone lines and the internet were blocked or shut off and there was no source of communication. But the venture of John Gosier, a serial tech entrepreneur from Wired.com, Abayima managed communication between mobile phones without SIM card.

During the same time, there was election time in Uganda and the candidates were on a lookout for gaining votes by any means. The government took the decision of blocking the use of words and statements, done through SMS, such as ‘put him out of power’ and ‘dictator’.

In the developing nations, mobile communication is believed to be one of the effective ways of getting in touch with the outer world. Providing the people of Uganda, Egypt, and various other countries a source of communication proved helpful in revealing, what is going on in these countries, to the outside viewers.

This particular situation justifies as how making the best use of technological freedom and innovation can prove fruitful in making significant improvements in economic conditions.

The healthcare sector will witness an annual growth

Healthcare, as we all know, is a huge industry and it includes all countries, which makes it a good case to glance at technology transfer. As per Centers for Medicare and Medicaid services, in the next coming ten years, the healthcare sector in America will witness an annual growth of 7 per cent.

This will be due to ageing populations, better medical technology, and increased overall costs. According to a report by the White House, the costs related to healthcare are envisioned to be around 35 per cent of American GDP by 2040, at the moment it is 18 per cent of GDP.

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A research was done by Siguler Guff, developing nations with BRICS ( Brazil, Russia, India, China and South Africa), the healthcare industry is worth more than US$850 billion.

This rate is on a higher side as compared to the aggregate GDP of these countries. There is no doubt that there is a requirement for cutting down the healthcare costs as the demand for healthcare is outpacing overall economic growth.

With the rise of the internet age, emerging markets, mobile communication, and customer support industry has witnessed a surge. This has proved successful in setting a stage for a considerable rise in economic and social growth in underdeveloped countries.

Smartphones have completely changed the lives of many 

Investment in the modern technologies in both developed and underdeveloped countries have the possibility of improving the economic conditions, but the prices should not be prohibitive. Using crowdfunding and foreign investment, these countries are adopting modern technologies to boost their economies and a start to cut short the gap between the socio-economic classes.

This effect can prove useful in boosting global economic output and social welfare. The positive side of these investments cannot be underestimated. Seeing the rising surge in the adoption rate of modern technology allows more opportunities for knowledge sharing.

While crowdfunding cannot compete with the huge monetary donations from the government end, but it surely builds a human connection that has been missing for quite a while.

The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your post here .