Technology and Economic Development

Abstract

Economists have had great difficulty in measuring accurately the contribution that ‘technical progress’ has made to measured growth in industrially advanced countries. This is largely due to the nature of the process. Technology in its strict sense is the body of knowledge about the industrial arts, applied science, engineering and so forth. Used more loosely, it encompasses both the knowledge itself and the tangible embodiment of that knowledge in an operating system using physical equipment. This knowledge is generated in a number of ways, but increasingly the new and improved products, processes, materials and systems which are the ultimate source of economic advance originate in large-scale research and development (R&D) institutions. Obviously not all R&D, or the application of the results, has an effect in economic terms. New products and processes have to be adopted to have any economic impact. The whole innovation process is usually described as the technical, industrial and commercial steps which lead to the successful marketing of new manufactured products and/or to the commercial use of technically new processes and equipment. In market economies, therefore, technological change is intimately connected with the concepts of competition, profit and the private possession of knowledge. In centrally planned economies, some factors influencing technological change are rather different, as are the actors in the innovation process.

This chapter was written when the author was Visiting Fellow at the OECD Development Centre, Paris. The views expressed are the author’s own and do not necessarily reflect those of the OECD.