Technology has always had a profound impact on daily life. Whether you’re talking about modern advancements such as artificial intelligence, ones of the recent past such as the computer microchip, or even older ones such as coal-powered trains, there’s no denying how technological advancements drive economic growth, according to investor Daniel Calugar.
It’s easy to overlook just how important advanced technologies are in our everyday lives. But there’s hardly anyone in our modern society who doesn’t rely on it to power a large portion of their lives.
Just think — 20 years ago, it would’ve been hard to comprehend a world in which you could carry a full-blown mini-computer in your hand capable of making phone and video calls to people across the world, giving you turn-by-turn directions and playing your favorite music. Today, there are some people who don’t really know a world without it.
Technological advancements continually reshape life. They change how we work, how we learn, how we communicate, how we consume, and how we produce.
Not only do they serve as catalysts for major change, but they also drive economic growth around the world.
Below, Dan Calugar dives deeper into technological advancements, exploring the symbiotic relationship between innovation, increased productivity, and economic prosperity.
Technology and Science are Interlinked
Technological advancements have had a significant impact on almost every industry. However, it has arguably had the most substantial influence on science.
Thanks to new technological innovations, we have been able to see and do things that simply weren’t possible before. The scientific revolution in the 17th century was only possible because of new technologies that created tools and instruments such as the microscope and the telescope.
British physicist Derek Price coined the term “artificial revelation” in 1984 to describe how technology has helped humans overcome the limitations placed upon them to learn of “natural phenomena we were not meant to see or hear.”
While these developments are certainly impressive, you might be wondering what this has to do with economic prosperity. Simply put, scientific advancements fueled by technological innovation have helped people not only understand the world better but have also helped us live longer, healthier lives.
Examples of this include germ theory, the discovery of viruses and bacteria, and the X-ray. The X-ray not only allowed doctors to examine the human body but also led to the discovery of the DNA molecule’s structure in addition to 29 other projects that won the Nobel Prize. Several imaging techniques followed, such as the MRI, CT scan, and ultrasound, which helped with post-discovery care along with earlier detection of diseases such as cancer.
Daniel Calugar points out that many people look past technology’s immense impact on science when considering how technological advancements have led to increased productivity and economic prosperity. Without these scientific advancements, it’s very possible that increased productivity and economic prosperity wouldn’t even be possible.
The Innovation Complexity Index
The Real Colegio Complutense at Harvard University is a non-profit organization that has extensively studied the relationship between knowledge, technology, and complexity in economic growth. RCC, which is focused on providing cooperation between Harvard University and the Spanish higher education system, put forth what it calls the Innovation Complexity Index.
In visual terms, it’s a circle where technology, economic growth, and knowledge support each other one after the next in a continuous, never-ending cycle.
Researchers at the RCC point out that economics has long considered technology to be “the key driver of economic growth of countries, regions, and cities.” This is because advancements in technology lead to increased efficiency in production, resulting in improved goods and services, ultimately leading to prosperity.
In recent years, there’s been a shift toward more open innovation, which has allowed knowledge to flow at increasing rates while also creating cooperation among research organizations, businesses, and education institutions. This is how modern technological advancement and knowledge sharing have progressed and how economic prosperity has followed.
Technology Transforms Industries
Throughout history, technology has transformed industries — sometimes directly and sometimes indirectly. Much like the Innovation Complexity Index, industries have been forced to constantly adapt to technological advancements in order to keep pace. It’s like the well-known phrase, “adapt or die.”
Entire industries have completely changed the way they function to remain competitive so they can thrive in an economy that’s always evolving. At the same time, completely new industries have popped up to serve the needs of businesses and consumers, thanks to these new technologies.
Modern technology has helped humans discover natural resources in the earth and extract them for our use. This includes oil and gas, copper, iron, and gold.
It also led to the agricultural revolution, which resulted in the more efficient production of food. Advancements such as pesticides, tractors, fertilizers, and high-yield seeds have helped to make crop cultivation profitable as a profession while also benefitting humans from a nourishment standpoint.
In a general sense, technology is a saver of time, money, headaches, human error, and so much more. It optimizes processes, reduces things such as slippage and waste, and increases efficiency and productivity in the process.
This is why the impact of technological advancements isn’t relegated to just one particular industry or one particular region. It’s led to higher rates of development and production throughout the economy and has actually helped to create what is today known as the global economy.
The Modern Technological Revolution
The pace of technological advancement seems to be increasing exponentially in recent years. Thanks to the discovery and development of new technologies, entirely new disciplines such as digitalization and automation have formed.
These disciplines have totally revolutionized business processes, completely disrupting traditional industries. Today, it’s almost impossible to think of a world without big data and data analytics, which both play such a huge role in the decision-making process.
The entire business landscape has been reshaped and transformed through these technological advancements, which has led to new opportunities and economic prosperity.
Daniel Calugar highlights some prominent examples below.
Many industries base their entire decision-making process on data analytics. Organizations rely on things such as predictive modeling, machine learning, and big data to provide them with valuable insights.
They use it to optimize their internal operations, target customers more efficiently and effectively, and develop new strategies based on what the data tells them. Thanks to technological advancements in data analytics, companies can more easily adapt to changes in the market while also improving the overall customer experience.
The Amazon and Walmart Effect
The way that companies produce materials, manage inventory, and distribute their products and services looks completely different today than it did even a few years ago. In fact, technologies have completely revolutionized these processes.
Without technological advancements, companies such as Amazon and Walmart wouldn’t be able to operate in the ways they do today. And whether you like these companies or not, there’s no denying how impactful they are on the economy.
As of mid-2023, Amazon employed nearly 1.5 million people across the world, and Walmart employed even more — 2.1 million people. Both companies also contract with loads of third-party entities to handle tasks such as deliveries, which in turn creates more jobs and stimulates the economy.
Both also pay income taxes — though not as much as some people would like — and both reinvest their profits into growing the business even further. What’s more, Amazon helps to facilitate small businesses, with almost 2 million retail “partners” who list their own products on Amazon’s website.
Amazon and Walmart are certainly not the only examples of how businesses have utilized technological advancements to impact the economy on a global scale, but they are two of the most prominent ones.
Production and Manufacturing
Modern technologies have completely changed manufacturing — for all industries. For instance, 3D printing has significantly reduced how much it costs to create product prototypes. This has not only accelerated the pace of production but has also enabled customization.
Now, companies that wish to create a prototype of a new product they are developing can get it faster and cheaper than before, which helps to stimulate further development and innovation. For many industries, 3D printing alone has led to a huge reduction in costs and improved efficiency, along with increased market reach.
Without modern technological advancements, e-commerce, as we know it today, wouldn’t have been able to evolve worldwide. Businesses today can reach customers across the globe, which has completely reshaped traditional models of retail.
This doesn’t just apply to the retail sector, though. Every industry, including B2C and B2B sectors, has benefitted from 3D printing and other major advancements in technology.
One of the biggest ways that technology has impacted industries is through automation. This development isn’t without some controversy, of course — as it has led to job displacements throughout the economy — but there’s no denying its monumental impact on increased production and economic growth.
Fueled by artificial intelligence and robotics, mundane, repetitive manual tasks are now completely handled by technology on an automatic basis. Instead of requiring humans to double-check numbers, input data, and even handle parts of the production process, this can all be handled by machines.
On the one hand, this has led to some job losses in the short term, as there is less of a demand for many positions that revolve around manual labor. At the same time, it’s created many new opportunities for workers to upskill and reskill so they can handle tasks that bring more value to the organization and even result in higher wages in the long term.
Irrespective of the effect on the labor market, automation has had a profound positive influence on productivity and efficiency from an organizational standpoint. Reduced costs and increased quality are just two of the many real-world benefits of automation.
Technology and New Growth Opportunities
Technology doesn’t just transform industries. It also creates completely new opportunities for growth, which in turn results in positive economic development. Companies need to remain competitive if they want to survive and thrive, and they must develop and adopt new technologies to do so.
The world was already far down the path of digitization before the COVID-19 pandemic began. Smartphones already existed, as did online communications, e-commerce, and more.
What the pandemic did, however, was emphasize just how important the already-existing technological advances were while speeding up both the adoption of those technologies and the further advancement and adoption of new ones.
Today, a majority of business happens online, regardless of industry. As a result, businesses have been able to reach markets that were unobtainable before. This has allowed them to expand their customer base without having to spend boatloads of money opening new locations throughout the world.
Today’s digital economy has also paved the way for entrepreneurs to create entirely new businesses and new sectors. For instance, the gig economy is only possible because of technological advancements in the digital economy.
Companies such as Lyft, Uber, Grubhub, and Doordash provide not only a desired service for consumers but also many flexible and temporary jobs for people looking to make an alternative living, add to their income, or create a new career.
In the same vein, the “professional freelancer” was also born out of the digital economy, with sites such as Upwork, Freelancer, and Fiverr helping connect skilled workers with companies that need specialized labor.
The pandemic serves as the perfect example of how technological advancements increase productivity and economic prosperity. In fact, without certain technologies, economies throughout the world would have come to a screeching halt for long periods of time.
The pandemic caused significant economic losses for many countries due to illness, increased need for medical care, and the forced closure of businesses. However, the implementation of modern technologies enabled countless companies across all industries to continue their operations.
Most importantly, technology allowed large groups of workers to communicate with each other easily, even when they weren’t located in the same office. The pandemic forced the adoption of communication platforms such as Slack, video conferencing software such as Zoom, and project management apps such as Trello.
These are all technologies that were available before the pandemic but advanced quickly during it to meet the increased need for what they offered.
Today, even as the pandemic has waned and future total shutdowns are unlikely, businesses rely heavily on these technologies to improve their communication and collaboration.
Access to Resources
The fact that technology makes accessing information, services, and resources so easy is one of the biggest factors in how it has led to new growth opportunities. In many ways, technology has served as an equalizer, providing both individuals and businesses the opportunity to earn on a relatively level playing field.
Students who can’t afford to travel to and from local colleges — or pay room and board to live there — can now take classes online. This leads to a greater accumulation of knowledge, leading to more innovation and greater economic prosperity.
Workers can gain access to better and higher-paying jobs since physical location is no longer a significant factor. For instance, people who live in rural communities in the middle of the country can potentially gain access to higher-paying jobs in large metro regions on the coasts as long as they have an internet connection.
The advancement of technologies in this way also greatly benefits businesses. They can more easily connect with potential vendors to reduce costs on essential materials. They can more easily collaborate and partner with educational institutions and business incubators. And they can more easily gain the knowledge they need to innovate more effectively.
These are some monumental positive effects that technology has had on the world, according to Daniel Calugar — and we haven’t even touched on completely revolutionary technologies such as artificial intelligence and advanced robotics.
AI and advanced robotics include some of the things already mentioned, such as automation, big data, and analytics. However, they have the power to do so much more.
Not only can these technologies — which are still being developed and refined — completely transform current industries, they have the power to create entirely new ones. And as these technologies advance, new opportunities for growth will pop up, resulting in increased productivity and economic prosperity.