INTRODUCTION
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1. INTRODUCTION
Role of technology in economic development
Technology has always played a vital role in economic
development, but its impact has become increasingly
significant in recent decades.
Technological advancements have led to new industries and
products to enter into the market, increased productivity, and
also improved efficiency in existing industries.
This has resulted in economic growth, job creation, and
higher living standards. Some specific examples of the role of
technology in the economy can be the development of e-
commerce which has revolutionized the retail industry as
well.
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OBJECTIVES OF THE STUDY
The present study tries to investigate the following objectives.
They are the following :
• How technology can be a better and more efficient
methods for carrying out different economic activities.
• To infer how technology can help reshape economies to
be more competitive, resilient and sustainable.
• To understand how technology allows for more efficient
production of more and better goods and services
• To highlight the importance of how new
technologies paves the way for production of new
cheaper goods.
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Methodology of data collection
The data and information in this study has been found through
secondary research.
The study will analyse the role of technology in economic
development using a combination of quantitative and qualitative
data from literary reviews.
The data will be collected through credible sources like industry
reports and government databases followed by trend analysis to
identify key drivers and impacts.
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LIMITATIONS OF THE STUDY
1. This study has been prepared using secondary research
and is hence prone to errors due to possible inauthenticity or
nonreliability, despite rigorous research and fact-checking.
2. Aggregated data may not capture nuanced effects or
regional variations, making it difficult to assess the specific
impact of technology on different sub-sectors or
demographics.
3. The study is based on data from 2010-24 and is not to be
generalized to other years
4. The fast pace of technological change can make it difficult
to keep studies current. Technologies evolve quickly, and
yesterday’s technology may soon become obsolete,
affecting long-term analyses.
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Review of
literature
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2. Review of literature
The interplay between technology and economic
development has been a focal point in both academic and
policy discussions. This review shows key themes and
findings from the literature, highlighting the ways technology
influences economic growth, productivity, and societal
change.
1. Technological Innovation and Economic Growth
– Solow (1956)
The relationship between technological innovation and
economic growth has been extensively studied. Solow's
(1956) growth model emphasized the importance of
technological progress as a driver of productivity. It has
developed the endogenous growth theory, which posits that
investments in innovation lead to sustained economic
growth.
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2. Productivity and Efficiency Gains
- Brynjolfsson and Hitt (2000)
Numerous studies have shown that technology enhances
productivity across various sectors. Brynjolfsson and Hitt
(2000) demonstrated that information technology (IT)
investments significantly improve productivity in service
industries. Similarly, in manufacturing, automation and
advanced manufacturing technologies have streamlined
processes, reduced costs, and increased output (McKinsey
Global Institute, 2017).
3. Job Creation and Destruction
- Bessen (2019)
The impact of technology on employment is a complex topic.
While technology creates new job opportunities, particularly
in tech-driven industries, it can also lead to job displacement
in traditional sectors. Bessen (2019) argues that while
automation can reduce demand for certain jobs, it also
fosters the creation of new roles that require different skill
sets, thus necessitating workforce reskilling.
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4. Access to Information and Global Markets
- World Bank (2016)
Digital technologies have democratized access to
information and opened up global markets. Authors like
World Bank (2016) have highlighted how internet access
enables small and medium-sized enterprises (SMEs) to reach
broader markets, enhancing their growth potential. E-
commerce platforms have particularly empowered
entrepreneurs in developing countries to compete globally.
5. Income Inequality and Technology
- Piketty (2014)
The relationship between technology and inequality is a
critical area of inquiry. Some scholars, such as Piketty (2014),
argue that technological advancements can cause income
inequality, as those with the skills to use new technologies
benefit more. Conversely, technology promotes growth by
providing access to education and services.
The literature shows the transformative role of technology in
economic development, highlighting both opportunities and
challenges. As technology evolve, ongoing research is
necessary to fully understand its implications for labor
markets, inequality, and sustainable growth.
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Analysis of
data
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3. Analysis of data
Technology plays a critical role in economic development,
influencing various dimensions such as growth, productivity,
innovation, and employment.
Here’s a detailed analysis of its role:
Technological Innovation and Growth
Technological innovations, such as advancements in ICT,
biotechnology, and renewable energy, fuel economic growth
by creating new markets, enhancing productivity,ect.
Previous studies show a positive correlation between
technological investment and GDP growth. Nations with high
levels of technology adoption generally experience
accelerated economic growth compared to those with lower
levels.
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Table 1
Years Technological growth
2019 1.00
2020 1.15
2021 1.35
2022 1.65
2023 2.00
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Long-Term Impacts
Technology supports economic growth by improving
resource efficiency like increased productivity, increased
GDP growth, increased wages . Ensuring that innovations are
in clean energy will help contribute to long-term economic
stability.
Table 2
Years GDP Employment Productivity Wages Inequality
growth (%) Index (Skilled) Index
(%)
2018 1.0 98.0 65 40 25
2019 1.2 97.5 67 42 26
2020 1.0 96.0 68 43 28
2021 1.5 97.0 70 45 28
2022 1.7 97.8 72 47 29
2023 1.8 98.5 75 48 30
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Productivity Gains
Robotics, and advanced software solutions enhance
operational efficiency across industries. For instance,
manufacturing technologies increases production speed and
accuracy.
Industries that adopt advanced technologies, such as AI and
machine learning, often see significant productivity boosts.
For example, companies using AI for predictive maintenance
can reduce downtime and operational costs.
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Startup Growth
Technology enables startups to scale rapidly and enter global
markets. Platforms like cloud computing and digital
marketing tools reduce barriers to entry and support new
business ventures.
Table 3
Years Growth (%)
2018 20
2019 30
2020 45
2021 60
2022 75
2023 90
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Employment and Labor Markets
Technology creates jobs in emerging sectors such as IT,
cybersecurity, and green technology. The rise of digital
economy jobs reflects the demand for new skills and
expertise.
Skill Mismatch
The transition to technology-driven jobs can create a
mismatch between the skills of displaced workers and the
skills required for new roles, necessitating reskilling and
upskilling efforts.
Economic Inequality
Technological advancements can widen income gaps, with
high-skilled workers benefiting more than low-skilled
workers. Policies to ensure equitable access to technology
and opportunities are necessary to mitigate these effects.
Technology significantly influences economic development
by driving growth, enhancing productivity, fostering
innovation, and transforming labor markets. While it presents
opportunities for economic advancement, it also poses
challenges such as inequality and job displacement.
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Table 4
Years Income inequality (%)
2018 5
2019 10
2020 20
2021 35
2022 50
2021 65
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Job Displacement
Automation and AI can lead to significant job displacement in
traditional sectors, such as manufacturing and retail, where
routine tasks are increasingly automated.
Table 5
Years Job Displacement (%)
2018 5
2019 8
2020 12
2021 16
2022 20
2023 25
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Technological Dependence
Heavy reliance on technology can create vulnerabilities, such
as susceptibility to cyber-attacks and technical failures,
which can disrupt economic activities.
Maintenance Costs
Continuous maintenance and updating of technology
systems can be costly, particularly for smaller firms or less-
developed regions.
Technology Obsolescence
The fast pace of technological advancement means that
technologies can become obsolete quickly, requiring
frequent updates and investments to stay competitive.
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High Costs
The initial cost of implementing new technologies can be
prohibitive for some businesses or economies, limiting their
ability to reap the benefits. Ongoing costs related to
maintenance, training, and upgrading can strain financial
resources, especially for smaller organizations.
Compatibility Issues
Integrating new technologies with existing systems can be
complex and problematic, leading to potential disruptions
and inefficiencies.
Screen Time
Increased use of technology can contribute to health issues,
such as eye strain, poor posture, and sedentary lifestyles,
affecting overall well-being and productivity.
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Findings and
conclusions
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4. Findings and conclusions
Findings
Increased Productivity
Technology is a critical driver of productivity growth. It allows
businesses to produce goods and services more efficiently,
often with fewer resources. For example, automation, data
analytics, and AI-driven tools streamline operations, reduce
human error, and improve output quality. This leads to
greater economic efficiency and growth.
Innovation and New Industries
Technological advancements lead to the creation of new
industries and sectors. Historically, the invention of the
internet, mobile technologies, and cloud computing gave rise
to e-commerce, app development, and digital finance, which
have boosted economies globally.
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Job Creation and Shifts
While technology automates certain tasks, displacing some
jobs, it also creates new opportunities. For example, the tech
sector, including software development, data science, and
cybersecurity, has emerged as a major job provider in many
economies.
Global Connectivity and Markets
Technology breaks down geographical barriers, enabling
businesses to access global markets. E-commerce
platforms, digital marketing, and supply chain management
tools have allowed even small businesses to reach
international customers, expanding economic potential.
Infrastructure Development
Technological advancements improve infrastructure
development. Smart cities, for example, use technology to
optimize transportation, energy consumption, and public
services, leading to more efficient and sustainable urban
development.
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Environmental Sustainability
Green technologies, such as renewable energy sources
(solar, wind), and innovations in energy efficiency, play a key
role in sustainable development. By reducing reliance on
fossil fuels and minimizing environmental degradation, these
technologies contribute to long-term economic stability.
Conclusions
Technology as a Catalyst for Economic Growth
The adoption of technology is a fundamental driver of
economic development, leading to more efficient resource
use, higher productivity, and the emergence of new
industries. It has the potential to transform economies by
boosting innovation and competitiveness.
Skills Development is Crucial
For technology to positively impact economic development,
there must be a focus on education and skills development.
Economies that invest in technology-related education are
better positioned to take advantage of technological
innovations.
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Sustainable Growth
The role of technology in promoting environmental
sustainability makes it an essential component of long-term
economic development strategies. Economies that adopt
green technologies are better placed to thrive in a future
where sustainability is increasingly prioritized.
In conclusion, technology is indispensable to modern
economic development, but the benefits must be harnessed
through thoughtful, inclusive, and sustainable practices.
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Bibliography
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5. Bibliography
Below is a list of key sources that cover different
aspects of the topic:
Reports and Papers
1.World Bank. (2020). World Development Report 2021
2. International Monetary Fund (IMF).(2021).
3.McKinsey Global Institute. (2017)
4.United Nations Conference on Trade and Development
(UNCTAD).(2020).
Online Resources
1. Harvard Business Review.(2019). https://hbr.org
2. MIT Review. (2021). https://www.technologyreview.com
3. Brookings Institution.(2022). https://www.brookings.edu
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