1. The following is a brief introduction to the topic:

Capital was considered the key to growth by economists in the 1950s and 1960s. The economists believed that by increasing investment today the production frontier would move outward allowing more goods and services be produced tomorrow. The advent of technology has allowed for the technology to become more than just a shifting force. Now, it is believed that the technology is driving our global economic growth. The term ‘Total Productivity’ is used to describe this rather abstract concept. Abramovitz’s turning point theory explains TFP to be that which is residual from the output of factors of production such as labor and capital. TFP is an output that is attributed to factors which are not determined by individual markets. The spillover effect of technology is the reason for this. Research and development carried out by a firm can have a positive impact on the entire industry, the society or the world. TFP cannot be observed and it is directly correlated to economic growth. It is therefore difficult to determine the exact impact of technology on our growth. It is widely accepted that technological advancements are a way of increasing efficiency and doing things better. We can clearly see that the link between the world’s economy and technology is the increase in goods and services.

A growth is the increase in goods and services produced over a period of time. A society experiences economic growth when it acquires more resources. A society’s resources may increase due to population growth, migration inward, or a rise in capital (e.g. Factory buildings, machinery, and tools. Even when resources are allocated better, economic growth can occur. Growth can happen when a society is able to learn to avoid misallocating resources and uses efficient methods to save time and energy. When we talk about the processes that drive growth in the global economy, we mean the complicated ways a society learns to acquire these resources or to better allocate them.

We live in an age where technology is a necessity. It’s almost impossible to do our daily chores without it. Technology has improved productivity and efficiency at home, at work, and in the gym. It has also increased the standard living of most people. The technology has been the most important in enabling the new economic system. Information is the basis of the new economy. Information is available in large quantities, allowing knowledge to be spread to all corners of the world. Information traveling efficiently has the end result of increasing the velocity of knowledge within the economic world. The key to economic development is this. Since the dawn of time, economists have tried to unravel the mystery behind the growth of the global economy. It seems now that everything comes down to information and technology.

2. Technological Advancements and Economic Growth

The process of improving technologies is a dynamic, nonlinear economic process. This process is fundamentally a learning one. At least three different methods exist for achieving technological learning. The first is to learn by doing. This method involves a company learning a new skill by teaching its workers how to use new technology and methods based on the experience of their employees. It is the most efficient method compared to the two others. Second, you can learn by doing. It is the easiest way to learn something new. The third way is to learn by searching. This method is complex and expensive, as it requires an organization to do basic research to find a new technology or method. It will be expensive because there is always uncertainty in research. The uncertainty of research can lead to a valuable long-term discovery.

The key to economic growth is considered to be technological advancements. Recent studies confirm this fact, which shows that R&D and technological learning play an important role in improving productivity in developed countries as well as other countries. Many developing countries have also succeeded in improving their economy through an increase in productivity across various sectors. They did this by allocating major portions of their national income to these areas or borrowing technology from another country.

3. Gains in Productivity and Efficiency

Many theories postulate that if we hadn’t seen significant improvements in IT, productivity growth would have been significantly slower. The high rate of IT investment is a relatively recent phenomenon. If one compares the rate of growth of productivity before the computer revolution and after, it is not clear that the rate has increased (Jorgenson 2001). The rate of productivity growth is different across industries. This is partly due to the fact the IT efficiency gains are not able to be achieved at the same pace across all sectors. In the past, the productivity of service industries has been lower than that of manufacturing sectors. This is because it’s easier to measure the productivity of manufacturing products. Step and Hicks claim that the only real way to improve productivity data is to measure productivity in terms of service provided, rather than the money spent to produce the unit. It is more likely that a measure can be created with the increasing use of modern technology. This will allow the efficiency improvements to be quantified.

4. Job Creation and Labor Market Dynamics

The productivity effect is a major factor in the amount of labor required. The Solow Paradox shows that an increase in IT investment does not always lead to higher productivity. According to the neoclassical theory, technological change increases marginal product of labor. This leads to an increase of labor demand and a greater level of employment. If technological change is labor saving and automated, it will reduce the demand for certain types labor. The empirical investigation of the relationship between IT investments and employment has been conducted in a variety of ways, with mixed results. Panel data revealed that the aggregate IT capital stock influenced labor demand more than investment. The shift away from computer hardware and software towards less IT-capital-intensive activities was a major factor in the growth of employment and undertakings.

Researchers and policymakers are concerned about the impact of technological change on employment. There is a high number of potential job displacements. Market economy principles persist in making certain jobs susceptible to technological replacement. Labor-saving innovations are concentrated in certain sectors under the job-specific paradigm of technological change. This creates a wage and skill bias, and implies that the aggregate employment effects of technology change may be negligible. The dual labor market theory was used to model the effects of technology change. This yielded different predictions, depending on the type of change. Neoclassically-induced technological change will widen the wage gap between primary and secondary work, restrict the primary labor market and increase secondary labor market activity.

5. Future Challenges and Potential Challenges

Even greater challenges will arise from the diminishing role played by national economies. The technological advancement is used to justify globalization and the increase of international trade. IT facilitates the exchange of information and goods, and it speeds up the process. It will increase the substitutability of products from different countries, and therefore increased competition. This is good news for consumers, as it means higher-quality products and more goods that are tailored to their needs and wants. This will not be without turbulence. In the face of increased competition, firms will have lower profit margins. If demand is elastic or inelastic, this can often lead to layoffs. Globalization and increased commerce also tend to remove barriers for factor mobility. This has been the goal of European countries in relation to the EU to achieve greater efficiency. However, it can also be the replacement of workers from countries that have higher living costs by workers from countries with lower living costs. The same example could be continued by replacing a German IT employee with an equally qualified worker in India. It may be more efficient globally, but the country with high living costs will suffer. This will lead to a situation where the national governments are less able to control economic issues, and have fewer resources available to accomplish national goals. The shift from a national economy to a global one could be a cause for concern, given the influence of national economies on wealth levels and distribution.

The second section explains that the shift of resources to the technology sector will slow down economic growth in other sectors. It is a prediction for the future, but evidence suggests that it has already begun to happen. In order to embrace a new technology, R&D resources and other resources are usually diverted from existing technologies. The more complex the technology, the higher the level of skill required to maintain and develop it. It also leads to higher wages in the IT sector, which is often higher than other sectors. All of this will lead to an increase in IT-related products and services and a decrease in everything else. Data showing the decline in the US manufacturing industry and other non IT industries supports this.

The pace of social and technological change can make it difficult for the society to keep up. The scientific community is constantly amazed at the rapid pace of technological advancement, but they often overlook the impact this will have on the society in the long run. There are many potential issues in the future that could arise with regards to economic growth.