Technology is often talked as the key to moving economies from underdeveloped to developed. Technological advances, with reference to the Solow growth model, are the only way to sustain long run economic growth and development. Through technology some believe that developing countries can create convergence to higher growth and developed economies. Hence, technology plays a large role in the development of an economy because it can control how and how much of a good is produced. Technology is rapidly changing and its changes are evident in an economy. With an increase in availability of technology or even with the advancement of technology, a producer can achieve a larger amount of output and still use the same amount of labour hours. Technology allows for a more efficient use of capital and labour.
Technology can therefore be used to aid in economic growth for a developing country. With greater national output, national income increases and a country will have access to international markets. The Industrial Revolution was a defining moment and a great example for the impact of technological change. Through technological change, the UK economy took off and entered into high sustained long run growth. This is often accounted for by the increases in technology in the manufacturing sector, i.e. the steam engine.
Information technology has become a prominent area of technology that has affected economies in many countries. It is the retrieval, storage, and transfer of information using computing and telecommunications. Looking at information technology from a macro perspective, it impacts production, investment, and employment. From a micro perspective, it affects individual businesses. Technology is an important part of globalization as well as labor and capital.
With its many benefits, it is important to remember that technology can still have some negative effects. With improper implementation, technology can cause vast income and social imbalances within a developing country. Furthermore, when implementing technology into a developing country, the technology must be sustainable, in order to provide sustainable development for the economy.