Technological progress—improvement in the ways that goods and services are produced, marketed, and brought to market—plays a central role in spurring income growth and reducing poverty. In fact, it is at the very heart of human progress and development.
|
The graph on your right shows that technological progress has gone hand-in-hand with income growth in developing countries over a recent 15-year period (1990 to 2005).
Rapid technological progress has reduced the share of people living in absolute poverty in developing countries from 29 percent in 1990 to 18 percent in 2004. Broadly, technological progress is what makes the difference between fast-growing developing economies and slow-growing ones. It also distinguishes economies that have made great strides in reducing poverty from those that have been less successful.
| 
|
| Measuring technological progress The most common measure of technological progress is growth in total factor productivity (TFP). This is the relative efficiency with which an economy produces goods and services given a certain quantity of labor and capital. In TFP terms, technological progress since the early 1990s has been strongest in East Asia, South Asia, and developing countries in Europe. It has been much weaker in Latin America, the Middle-East and Africa. TFP is an indirect measure because it ascribes to technology all income growth that cannot be explained by investment and increases in labor supply. Measuring technology directly is difficult. Unlike pencils and pens, the physical presence of technology cannot be easily counted. A World Bank report, Global Economic Prospects 2008: Technology Diffusion in the Developing World, goes beyond the common TFP measure to assess technological progress more directly—by measuring the quantity and quality of inputs and outputs. The World Bank has developed a summary index of technology that includes a much wider range of indicators than included in other technology indexes. This index is derived from three sub indexes that measure four dimensions of technological achievement: The extent of scientific invention and innovation The diffusion of older technologies The diffusion of newer technologies The intensity with which foreign technologies are employed in domestic production.
According to these measures, technological progress in developing countries between the 1990s and 2000s has been very strong. But the “technology gap” between rich and poor countries remains large
and developing countries’ capacity to absorb technology is still weak. |
|
Technology and technological progress are relevant to a wide range of economic activities, and not just, as one might assume, to manufacturing and computers.
Sometimes, seemingly low-tech products such as corn or flowers can result from high-tech production processes. And in some countries, seemingly high-tech products like computers are produced by relatively low-tech assembly activities.
|
The Green Revolution: Simple technological advances, dramatic effects 
Asia’s Green Revolution is a good example of how modest technological advances can have a dramatic impact on development. Between 1970 and 1995, better agricultural technologies (pesticides, irrigation, synthetic nitrogen fertilizer, and development if high-yield varieties of maize, wheat, and rice) doubled Asia’s cereal production while increasing the land area devoted to growing cereal crops by just 4 percent. By the late 1990s it was clear that poor people had benefited from higher incomes, cheaper food, and more demand for their labor. The Green Revolution also shows the downside of technological advancement--unintended effects such as water pollution from excessive agrochemical use.
|
Technological progress can contribute to development in two broad ways:
By lowering costs, improving quality, creating new products, and helping reach new markets. By using relatively simple skills for far-reaching development benefits.
For example, the simple skills needed to build rainwater collection systems can greatly improve access to clean drinking water and reduce the incidence of diarrhea, a major cause of infant mortality.
While technological progress can bring great benefits, it can also be disruptive when these benefits are not evenly distributed. Technological progress may benefit some classes of workers over others. It can also mean significant short-term losses for competitors who are still using older technologies. But disruptions caused by technological progress can benefit economies by spurring domestic competition. For example, the introduction of mobile phone technology in several developing countries has brought in significant competition not only in the telecommunications sector but also in banking and other information-sensitive sectors.
|
.gif)
RSS