By Lekshmi Dinesh
Technological progress
Increasing capital, both human and physical, is the only way to create economic productivity and growth in the long run. One way to directly increase the amount of capital in an economy, also called the capital stock, is by increasing the spending on capital.
Of course,spending money to simply increase the amount of capital in an economy is not the only way to increase productivity. Increases in the quality of capital can also affect growth. The major way the quality of capital is increased is through technological progress, the fruit of research and development. Technological advances can allow a given unit of capital to enable a given unit of labour to increase production. This increase is contrasted to the increase created by simply enlarging capital expenditures.
How does technological progress come about? The major ways are though innovation and invention. Every year, billions of dollars are spent on research and development by firms and government agencies, like NASA. This money leads to improvements in existing technology and to the creation of new technologies. While innovation and invention may not always be immediately profitable, in the long run they can prove very lucrative for the researchers and the developers–as well as for the economy as a whole, as new, more efficient production technologies become available.
Technology’s Role in Economic Development
Technology encompasses a huge body of knowledge and tools that ease the use of economic resources as a way to produce goods and services efficiently and innovatively. Technological progress is essential to economic growth and development, and the more advanced the technology available, the more quickly the local and global economy can improve. Technology’s role in economic development is further broken down below.
Time is Money
Technology can save the time it takes to produce a good or deliver a service, contributing to the overall profits of a business.
Efficiency
Technology can contribute to the efficiency of a business’s output rate, allowing for larger quantities of products to be moved or of services to be rendered.
Specialization
Technology has lead to an increase in the division of labor and specialization of jobs within a business, further contributing to the efficiency with which a business is able to run.
Natural Resources
Technology has a huge effect on the ability of businesses and governments to access natural resources and use them in the most effective ways possible to benefit both the business and the economy.
Industrial Expansion
Thanks to the increased efficiency of labor with the ever-improving state of technology, businesses are able to increase total output, which in turn leads to higher profits and greater economic development.
Research
Better technology has lead to further research into nearly every sector of business and science, meaning businesses can benefit from all sorts of technological advancements.
The Internet and International Trade
Information technology is the single most important element in the success and growth of international trade and job market growth, allowing businesses to share information and conduct trade in less time than the blink of an eye.
Dynamic technologies 