ROLE OF TECHNOLOGY IN ECONOMIC DEVELOPMENT

ROLE OF TECHNOLOGY IN ECONOMIC DEVELOPMENT

INTRODUCTION

In any country , for it’s development economy plays a big role. In order to get into the topic, we should clearly identify both words, technology and economic development. So let’s have a small look on the definitions of the two words.

Economic development is the increase in the amount of people in a nation's population with sustained growth from a simple, low-income economy to a modern, high-income economy.

Technology refers to whatever can be said at any particular historical period, concerning the state of the art in the whole general field of practical know-how and tool use.

The technology, technology change and technological progress have played an important role in

development of human kind.

FROM HISTORY

How big was the difference between the lives before and after the First Industrial Revolution, sometimes compared to the change after discovery of fire? This is not to say that there were no important technological advances in history before the First Industrial Revolution. On the contrary, China in the 14th century was probably far more advanced than Europe. However, all the advances before the First Industrial Revolution did not yield the process in which countries became industrialized. The First Industrial Revolution is a product of the eighteenth century. It encompasses variety of innovations, especially in the cotton industry of England. It was the time of transformation from handicrafts to factory system of production. In the early modern period, some people in Western European nations developed the idea that economies could "grow", that is, produce a greater economic surplus. This surplus could then be used for consumption, warfare, or civic and religious projects. The previous view was that only increasing either population or tax rates could generate more surplus money for the Crown or country. The very important effect of the Industrial Revolution was that it was self sustainable, unlike the situation before the Revolution, where any improvement in conditions and opportunities were dampened by the increase in population

During the eighteenth and nineteenth centuries, cotton manufacturers were combining sets of new

and traditional technologies. This combination typically included steam powered spinning in factories with large-scale employment of domestic handloom weavers and a mix of powered and domestic hand weaving, long after the powered technology became available. The combination of technology was due to risk spreading, problems involved with new technologies, and the cheap labour supply of women and children. For some time, the traditional sector, and not the other way around bolstered the modern sector. Even though industrial transformation was not as intense in other industries as in cotton, it can be said that it did give rise to differing experiences and social relations. Many innovations and inventions in organisation and use of labour were common to all industries and sectors. It may be further said that the industrial revolution was not merely sum of social and economic changes added up, but rather more than sum of measurable parts.

By the beginning of the twentieth century the US took over as the industrial leader over Britain.The technological lead of the US was very real and the gap became even more substantial during and after the World War II. As Nelson and Wright (1992) argue, on the microeconomic level, the US firms were significantly ahead in application and development of the leading edge technologies. US made up the largest portion of the world trade, and overseas branches were often dominant in their host countries. Today, that is no longer the case. US technological lead has been eroded in many industries, and in some, the US is even lagging behind. There are two distinctive slices of the US dominance in the post war world. One is the dominance in the mass production, derived from favourable historical access to natural resources and single largest domestic market. The other part of the story is the lead in the high technology industries induced by massive private and public investment in R&D and scientific and technical education that the US made after World War II.

FACTS

Economic Development Models

The 3 building blocks of most growth models are:

1. The production function,

2. The saving function

3. The labour supply function (related to population growth).

Together with a saving function,

growth rate=saving rate/output ratio

Assuming that the capital-output ratio is fixed by technology and does not change in the short run, growth rate is solely determined by the saving rate on the basis of whatever is saved will be invested

Examples for models :

1. Harrod–Domar model

2. Exogenous growth model

Economic developers

Economic development, which is thus essentially economics on a social level, has evolved into a professional industry of highly specialized practitioners. The practitioners have two key roles: one is to provide leadership in policy-making, and the other is to administer policy, programs, and projects. Economic development practitioners generally work in public offices on the state, regional, or municipal level, or in public-private partnerships organizations that may be partially funded by local, regional, state, or federal tax money. These economic development organizations (EDO's) function as individual entities and in some cases as departments of local governments. Their role is to seek out new economic opportunities and retain their existing business wealth. There are numerous other organizations whose primary function is not economic development work in partnership with economic developers. They include the news media, foundations, utilities, schools, health care providers, faith-based organizations, and colleges, universities, and other education or research institutions.

CONCLUSION

From the historical viewpoint, we can observe major importance of technology for growth and

development and present levels of development. However, if the technology is the major issue, this should mean that all countries should converge to higher levels of development. Naturally, this does not hold. Historical development of countries is not one and the same. Leaders in the past are not leaders today. Britain may have been the leader, and the first country to industrialize, but that was not enough to stay on top. This ever changing role of leaders and followers is continuing historical occurrence. Furthermore, one should be patient with diffusion and wider use and benefits of invention and innovations. It takes long time for new technologies to take root, even in situations when new technologies are largely available, transferable and more productive than traditional technologies. Countries have shown a lot of rigidity to this respect, some have lost entire industries to other countries due to inflexibility. One of the components that are attributed to fast growth of both European countries and successful East Asian countries is social capability which was in place once technology was available for transfer. In such conditions technology plays a major role in growth and development. However, if such threshold is not present technology or technology transfer is of little or no use.