Technology has been a major factor of economic expansion throughout mankind's recorded history, since the invention of the wheel. However, it was after the Industrial Revolution that extensive use of new technology revealed the boost machinery can give to an economy's output. Furthermore, relatively recent experience (of the last century) has also revealed certain drawbacks applied science can have for capital circulation and people's economic prosperity.
Since the start of the Industrial Revolution in the 18th century, the introduction of advanced machinery in factories has made it possible to give human workers only the most delicate or crafty of jobs and leave the rest to automated devices. For example, it's machines that paint new cars, making this final step of the production process much quicker. However, not only goods' production benefits from new technology, but also services, such as information technology, media companies and financial firms rely on computers and networks (Internet) to send and retrieve valuable information quickly.
An important aspect of a successful economy is its ability to sell its excess production to other markets, in other words to export goods and services. For example, according to data from the U.S. Census Bureau, exports brought $193.9 billion to the economy in March 2014. Technology in the form of new means of transportation (faster freighters, cargo airplanes), as well as new methods of communication (fax, Internet) has effectively shrank the world and made international trade more accessible and efficient.
As technology has become a basic element of all modern enterprises, production is affected greatly by flaws and malfunctions of machinery and information systems. E-commerce businesses cannot function if Internet connection is lost, while production of a factory is reduced when a machine stops operating. In addition, as technological devices become more advanced and complicated, only specialized professionals, such as mechanics and programmers, have the ability to fix a problem.
New technology has created a whole new field of jobs, which includes mechanics, programmers, machine operators and other relevant specialized professions. However, at the same time a number of low- to middle-level jobs -- requiring no particular specialization -- are lost, as machines replace the human capital. For instance, modern machines can undertake routine tasks in factories, making one or more salaried employees unnecessary. Unemployment deprives people of money that they could spend in the market, making their contribution to the economy tiny.
- Harvard University: Reinventing the Wheel -- The Economic Benefits of Wheeled Transportation
- University of California, Berkeley: Economics of Information Technology
- Princeton University: Creative Destruction
- U.S. Census Bureau: U.S. International Trade in Goods and Services -- March 2014
- Microsoft: A Powerful Tool for Economic Recovery