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Factors in Economic Growth

Paper Type: Free Essay Subject: Economics
Wordcount: 1429 words Published: 17th Oct 2017

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From the very beginning of time, man has strived to improve his way and quality of life. The caveman discovered how to make and use tools, developed a logical sequence for activities and evolved the processes that added value to his life.

What is Technology?

The dictionary meaning of technology is; the branch of knowledge that deals with creation and use of technical means and their interrelation with life, society and the environment, drawing upon subjects.

In other words technology can be defined as

  • the application of scientific knowledge for practical purpose.
  • the sum of the means and methods of producing goods and services.
  • the purposeful application of information in the design, production and utilization of goods and services and in the organization of human services.

What is Economic Growth?

Economic growth is the increase in market value of the goods and services produced by an economy. Economic growth is the increase in a country’s productive capacity as measured by comparing gross national product (GNP) in a year with the gross national product (GNP) in the previous year.

How is technology related to economic growth?

Technology is the key and fundamental requirement for value addition to raw materials and people. It provides the key to unlocking any country’s potential in terms of decreasing overhead costs associated with outsourcing and creating employment opportunities.

Technology is considered the most important of the three (3) of economic growth. Other drivers being capital accumulation and population growth (i.e labour force). In fact, no nation can develop without technology.

The relationship between technology and economic growth has been captured in a vast number of formal models for half a century.

Over the past several decades, the economies of the world have become increasingly linked, through expanded international trade in services as well as in primary manufactured goods, through portfolio investment such as international loans and purchase of stock and through direct foreign investment, especially on the part of large multinational corporations. This all wouldn’t be possible without technology.

Globalization is one of the most frequently used words in discussions of development, trade and international political economy.

As the form of the word implies globalization is a process by which the economies of the world become increasingly integrated, leading to a global economic policy making.

Technology has turned the world to a global market.

Technology plays a fundamental role in wealth creation. Improvement of the quality of life and real economic growth and transformation in any society.

The united states emerged from an agrarian economy in the 19th century into an industrial superpower in the 20th century through advances in technology.

Taiwan and Korea have exploited advances in silicon microelectronics from the early 1960’s.

China and India have emerged as industrial leaders in manufacturing and information technology respectively.

Life has been made so much easer because of technology. Invention of cars, roads proper building structures, job creation, medicine, education, nutrition, discoveries, reduction of death rate increase in birth rate, computers, mobile phones, electricity etc.

Health and education are closely related in economic development. Education plays a key role in the stability of a developing country to absorb modern technology and to develop the capacity for self sustaining growth and development. Health is a high prerequisite for increases in productivity while successful education relies on adequate health as well. Thus both health and education can also be seen as vital to components of technology and economic growth, as input to the aggregate production function. Their dual role as both inputs and outputs gives health and education their importance in economic growth.

Poor health condition can harm the productivity level of n economy.

The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race. The English cleric and scholar Thomas Robert Malthus in 1798 believed that he rate at which the human was increasing he feared that the food being produced wouldn’t be enough to sustain the population. Being in such an era he was he wouldn’t have tot that technology would solve that problem and so much more. Once again technology saving the day.

How ever as they say every good side has a bad side. Technology although has brought a lot of good things it also has its negative effects.

The growth of globalised production system may reduce the need in developing countries to build local capabilities – MNCs transfer some of the factors the countries lack.

Given economies of scale and agglomeration and cumulative learning, technological system tends to concentrate in a few sites. Economies of agglomeration increase the inequitable spread of global production.

Technology could be potential contributors to degradation of the environment.

Technology innovations often make critical industries or agricultural products uncompetitive or obsolete. this puts countries that have failed to anticipate change or whose economy relies heavily on a few traditional production risk.

Those countries where manufacturing is an important source of employment for uneducated workers face difficult educational and political challenges associated with the transition to manufacturing practices that are more knowledge based and specialized.

Exposure to new technologies and to international culture and fashion may weaken long standing traditions and practices. New technologies in some cases can assist in the prevention or exploration of local culture, but developing countries will need such preservation an active focus.

There is potential for the convergence of developed and developing economies over the long term. This can result in a decrease in independence for developing countries.

A widening gap between technology “haves” and “have nots” maybe develop across countries and across socioeconomic groups within countries. Such equity issues different rates of investment and development in different regions, can create unrest and lead to the persistence of poverty. The distinction may change from “developed vs. developing countries” to “populations that are technologically adept and those that are not and between population that are plugged into rapidly changing knowledge and those that are not”.

Conditions that encourage that encourage technological progress.

An education system that encourages creativity and pursuit of scientific and technological knowledge.

An educated and workforce.

A network of capable research laboratories linked together abed able to gain access to scientific and technological information from outside world.

Facilities for product development and quality control, including testing and strands laboratories responding to international stands.

Critical technical resources, include machine shops, precision foundries, and computational facilities.

An industrial structure that will sustain a productive industrial ecology in which small techcally oriented and potentially innovative suppliers serve larger ones that have access to markets resources.

Institutions or programs that link researchers and investors tp the potential users of the knowledge they generate, as well so investors.

A legal system to protect technologically innovation.

An economic policy environment that encourages research in development and investment in innovation.

A reliable electric power network with good frequency and amplitude control.

An adequate transport, communication and telecommunications infrastructure

In Economic Growth, technology should be directed towards reduction of inequalities between advanced and developing countries and between various people within a country

Technology should make the natural and social environment harmonious without seriously endangering the future.


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