File Name: role of technology in economic growth and development .zip
Technological advances have significantly improved operations and lowered the cost of doing business. Currently, as an example, just a few technicians controlling robotic systems can operate an entire manufacturing plant, and innovative inventory systems are capable of supplying needed parts within a short time for assembly. Advancements in the computer industry, coupled with advancements in telecommunications, have increased job opportunities and strengthened economic growth.
Not a MyNAP member yet? Register for a free account to start saving and receiving special member only perks. Research also established that two cents worth of vitamin A given to children every six months could reduce child mortality in many countries by over one-third. In agriculture, rice-wheat rotation techniques have significantly enhanced food production in South Asia. In Central America, scientifically based natural resource management has been essential in developing the tourist industry, a major source of foreign currency.
Technological advances have significantly improved operations and lowered the cost of doing business. Currently, as an example, just a few technicians controlling robotic systems can operate an entire manufacturing plant, and innovative inventory systems are capable of supplying needed parts within a short time for assembly.
Advancements in the computer industry, coupled with advancements in telecommunications, have increased job opportunities and strengthened economic growth. All physical barriers to communication over distances have been properly overcome by the internet. In a similar way, manufacturing and consumer goods companies have developed online links to their suppliers and customer support. Suppliers can keep track of production line efficiencies through automated systems and can more efficiently ship parts and materials to the required locations, reducing inventory and downtime.
In addition to that ecommerce and online banking capabilities have also helped reduce the cost of doing business. Many researches from many respected companies, such as BCG, IMF and World Economic Forum show that whenever companies cut back on technology investments aiming to shore up profits, the result is the opposite, as profits sink significantly, and, as a side effect, GDP also falls dramatically, then a chain reaction starts with the fall of labor productivity after a few years.
As a matter of fact, what companies are really doing is cutting back on an important investment that could create the next growth wave and, in many instances, that investment could generate huge leverage, helping to lower costs and expenses much faster than technology spending rises, but companies can only achieve that by managing their technology spending properly.
To do that, senior executives require new metrics and new ways of thinking. In order to successfully navigate the technology economics scenario and leverage optimum business performance, executives must create, measure, and track virtual economic measures just as carefully as they follow metrics about the physical world. The impact of technology economy in the market is very significant, infusing even the measurement of the market economy. Tech powerhouses like Apple, Google, and Amazon, whose stocks are valued much higher than those of many long-time industrial members, are replacing large industrial super companies.
Apple, with its high market capitalization, accounts for such a large share of the DJIA, for example, that any hiccup in its quarterly earnings can move the entire index, situation that was once done by other large corporations such as GM and Caterpillar.
Technology has an amazing power of permeate companies. An important measurement of the technology economy is the observing the Worldwide IT Spending volume, which is regarding the corporate spending for hardware, software, data centers, networks, and staff, both internal and outsourced IT services. Currently, this volume is close to USD6 trillion per year.
Technology spending, gross margins and economic growth have a strong relationship when measured by productivity and GDP. A good example is that executives can predict with some accuracy the impact on the overall economy of a decline in technology spending.
Whenever companies cut back on discretionary spending in order to improve profits during a downturn, they slash their investments in technology. Soon afterward, GDP falls dramatically, and, within a few years, labor productivity across the economy falls, as technological innovation is an important component of productivity.
The relationship between technology intensity and GDP is better illustrated on the chart below:. That trend accelerated through and until , when companies belatedly realized the magnitude of what had happened and began to cut technology investment dramatically. After that, technology intensity dropped precipitously along with gross margins.
The chart below illustrates this effect:. Within most companies around the globe, in every single industry, technology investment is growing faster than revenues and, in many cases, faster than the GDP of any country.
With that in mind, it is essential for companies to control, adapt, and optimize investments in real-time according to market conditions and on the basis of new forms of market data. Companies need to consider all inputs and outcomes and look at technology economically to gain competitive advantage before competitors do. Finally, if executives understand it and look at technology investments this way, it will not only matter, it will make all the difference for the their companies and for the global economy.
Marco Antonio Cavallo is a digital transformation strategy expert and author. Here are the latest Insider stories. More Insider Sign Out.
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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. Technology can save the time it takes to produce a good or deliver a service, contributing to the overall profits of a business. 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. 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. 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.
Water technologies have become new solutions to water scarcity and could play an increasingly crucial role in the future. However, theoretic and empirical studies on the economic effect of water technologies which incorporate water resources into a sustainable economic growth model remain scarce in northwest China. Considering the case of Northwest China in this empirical research, we apply the stochastic production frontier model by using panel data from to The results shows that progress in water technologies has indeed increased GDP growth and the current level of water technologies is not a key factor in eliminating the constraints of water resources. In addition, water scarcity still constrains economic growth in Northwest China and progress in water science and technology is the main power of all water technologies.
The application of complexity science tools to the study of society allows for the analysis of phenomena that have been hard to identify and analyze with more traditional tools, especially in the field of Economics, which in the absence of these tools has tended to work with relatively low dimensional representations of reality. But the increasing availability of more detailed information of social phenomena makes it particularly useful to use tools that can exploit this informational richness. This opens up fascinating new horizons on almost all fields of knowledge in the social sciences.
The technology can be regarded as primary source in economic development and the various technological changes contribute significantly in the development of underdeveloped countries. The level of technology is also an important determinant of economic growth. The rapid rate of growth can be achieved through high level of technology. Schumpeter observed that innovation or technological progress is the only determinant of economic progress. But if the level of technology becomes constant the process of growth stops.
Bioeconomy pp Cite as. To improve sustainability, the global economic system has to undergo severe transformation processes. This chapter deals with the possibility of an innovation-triggered transformation towards a knowledge-based bioeconomy, which is supposed to overcome the current lock-in into a fossil fuel-based CO 2 -intensive production. To do this, a neo-Schumpeterian view is applied that highlights the complex interplay in knowledge generation and knowledge diffusion processes between firms, consumers, and government institutions. By applying the neo-Schumpeterian approach, it becomes obvious that innovation and economic growth are part of the solution and not part of the sustainability problem.
This study analyses the impact of the use of digital technology on economic growth for 39 African countries from to This analysis applies a system GMM estimator to understand the extent to which the usage of digital technology facilitates growth using a measure of digitalisation from the Networked Readiness Index. Unlike previous research, we distinguish between the impact of individual, business, and government ICT usage on growth and show that only individual usage has a positive impact. Furthermore, a disaggregated analysis of the types of usage reveals that two indicators, social media and the importance of ICTs to government vision, are significant for growth. There is a well-documented contention that digitalisation creates economic growth Bukht and Heeks,
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