The economics of technology has a lot to do with our society. It influences every aspect of our daily lives from what we drive to what we eat.
In fact, technology is constantly growing and evolving and affecting every area of our lives. Economists call this process technology diffusion and it has had a tremendous effect on the Australia and the rest of the developed world.
Technology has always been an enabler in society. There have been many attempts over the years to channel the power and knowledge of the people more efficiently. The advent of the railway system, for example, gave rise to huge advancements in the ways people were able to communicate and interact with each other. The internet has similarly provided a pool of ideas and resources for people to explore and contribute to the overall progress of society. All these advancements in technology are good for economies because they allow people to make greater purchases and investments, allowing for economies to grow and become stronger.
Unfortunately, the growth of society is also having an indirect effect on technology and the economy. Technological innovations and developments tend to spur the creation of new jobs and businesses. When new companies and businesses are created, there are typically more workers available and therefore, technology increases the overall employment level.
The relationship between technology and the economy of a country is not constant, however. For instance, there are countries that have a very high level of technology penetration and those that have minimal levels. The former tends to see a positive correlation between technology and the economy while the latter tends to have a negative correlation between the two. However, there are some exceptions to this generalisation. Developing nations tend to have a high level of technology penetration yet they tend to have a relatively low economic growth rate.
One thing that seems to be true across the board is that technology drives up the cost of goods and services. This has an obvious impact on the economy. A company that develops a new technology that makes it cheaper or more efficient will likely be able to charge a higher price for its product or service. The same economic principle applies to software, hardware, and other aspects of technology. Those that develop these tools and utilise them in the manufacture of their products or services will be able to charge a higher price for them than a company that uses the same or similar technology in the production process.
One of the reasons that technology adoption tends to be correlated with economic performance in the developed world is the differences in political system. Technological change tends to be especially rapid and dramatic in the economically advanced world. Developed countries typically require a longer period of time for implementation before they can experience the full benefits of technology adoption.
In other words, the developed world must wait for the existing technological systems to “set in place” before they can enjoy the full benefits. In developing countries, technology adoption tends to occur much faster and there is a shorter time period between the adoption of new technologies and the creation of domestic systems that can effectively use the new technology. If a developing country does not yet have a domestic technological system that can implement new technologies, it will likely take a longer period of time before they can design and set up a system that can effectively use the technology.
The other reason why technology adoption is positively correlated with economic performance is because of the increased competitiveness of the companies that are the most successful at implementing it. Most large companies are highly competitive by nature and this drives the technological developments that create a competitive advantage. The adoption of new technology by a company creates a short term increase in profits, but the long term impact of those profits is based on the ability of that company to use the technology in a way to create a larger market share. The more a company can do this the better their ability to become dominant in their respective markets.
Another reason why technology adoption tends to be positively correlated with economic performance is because of the different incentives that are extended to developing countries in terms of technology transfer.
Developed countries typically offer subsidies and other types of economic benefits in order to encourage the adoption of new technology. These benefits can be particularly attractive to companies that are already established in the developing world and which wish to reduce their expenditures in order to use technology more efficiently. This makes technology adoption more attractive to these companies than would be the case if they were to acquire the technology from developed nations without the additional benefits and incentives
