Technology and Economic Growth

The general pattern of economic growth over the last few decades that we noted in Chapter 2 was: rapid in East Asia; moderate in South Asia; and slow or negative in Latin America and Sub-Saharan Africa. These patterns are paralleled by the success in absorbing technology from the rest of the world, showing that technology has a close link with economic growth. The question of causation, however, is a difficult one. Do new technologies provide new goods and services for export, raise productivity and reduce costs, thus driving economic growth, or does a rapidly expanding economy create the wealth and resources to purchase and create new technologies? New technologies can help a country overcome diminishing returns to investment, permitting sustained economic growth and enabling society to avoid the trade-offs associated with scarce resources. Nevertheless, any act of technological creation is closely linked to destruction; of older technologies, of traditions and existing patterns of employment.