The impact of technology on the economy is one of the most debated issues at the moment, with topics ranging from the long-term boost on productivity, all the way through to the potential for automation, which is feared to result in unemployment – not forgetting the somewhat controversial discussions around Artificial Intelligent (AI).
From steam powered mechanics to the discovery of electricity, and now in more recent times, the computer, technology has by far shown the most innovative impact on the way that we work. Such innovations raise productivity, which in turn increase the growth potential of the economy. Over the years most individuals in advanced economies now have greater and easier access to information and there has been a substantial increase in the number of individuals who have access to an internet connection or any technological device than there was somewhat ten years ago.
Manufacturing output and retail sales were once the backbone of the economy. Recently the spine has been seized by specialists advisors on investment, company organisation, technical, IT, architecture and finance consulting, to name a few. The inputs and outputs of these activities take the form of virtual blueprints, computer codes, technological recommendations, specifications, databases and the likes. Business activity increasingly consists of people sitting in front of a computer screen and having meetings to appraise projects, making for slicker and more accurate business processes.
The Solow growth model lays some great foundations for understanding economic growth and the impact of technology. The model shows that across countries there is a clear association between periods of high output growth and significant technological progress. It was only from 1970 – 1995, when computers were first introduced, that high output growth is not recorded, but this is largely perceived to be the lagging effects of adopting computing systems.
One thing is for certain, there is no turning back. Technological innovation will continue to spread more rapidly as globalisation further increases. The question is; “Are you ‘for’ or ‘against’ it?” Economic disruptions and uncertainty can fuel social anxiety regarding the future and it’s clear that people fear that job automation is imminent. It is already known that, largely in the manufacturing industry, technology is replacing what used to be done by human hands and thinking, making them somewhat obsolete. Everyone is worried about how long they have left in the job market before they are replaced by technology. So, the question should really be restated to ask, “is technology a good thing?”. The answer is “yes, predominantly so.”
Maintaining competitiveness amidst domestic and global challenges is a big issue for many firms and there is no doubt, due to globalisation, that investments in technology and embracing emerging smart tools and appliances is necessary. Those that do so will be able to compete both nationally and internationally, while those who don’t will get left behind. Technology could also offer this fast-growing, workaholic world shorter work days, and as Max Vercace mentions in his Forbes article; “the amplified productivity could help us to rebalance the unbalanced lifestyle that people in advanced countries like the United States are today experiencing.” An alternative future reality is that as technology advances our roles and jobs as humans will evolve to suit the opportunities made possible by new innovations.
With this in mind, companies need to consider all inputs and outputs and look at technology economically.
If executives understand and look at technology as an economic driver rather than a business notion, it will make the difference for their companies and the global economy.
