Technology in the economic sense is when either the output increases while the input remains constant, or the output remains constant, but the input required for it decreases. This technical progress is responsible for a large part of the economic growth of modern industrial nations.
If technology is mentioned, so-called technological progress is also often mentioned. Ultimately, however, this is the science for the further development of the technical means used primarily in production.
From an economic point of view, technology describes the possibilities surrounding the production of goods. But the related knowledge of economics also falls into the area of technology. The acquisition of new production technologies usually goes hand in hand with an increase or simplification of the production of a good.
Effects of technology on the economy and seo services
The concept of technical progress or technology is of particular interest in connection with economic growth. Economists assume that the development of new means of production and production processes has a significant impact on this very growth.
There are basically two options:
- The output remains constant, but fewer means of production or labour have to be used for this.
- The output increases, but the means of production used or the work performed remain constant.
In addition to this purely qualitative improvement in production, there are also new products as a result of technical progress. Significant examples of this are cars, airplanes and the Internet like seo services.
Technology and economic growth
In general, there are two factors of production in the economy: labour and capital. However, in the long term, economists assume that technical progress must also be included as a variable in the overall economic production function. In industrialized nations, in particular, technology is even regarded as a decisive factor for growth. The reason:
Work: The amount of labour in an economy can only grow if the population itself increases or if people work significantly longer. In modern economies, however, population figures are stagnating.
Capital: Capital growth also takes place in industrialized nations. For example, people develop new machines or pay for buildings that they can use for production.
Technical progress: Depending on the empirical study, however, technological progress accounts for 40 to 60 percent of economic growth. For example, digitization has made numerous production and service processes significantly simpler and more efficient.