Introduction
Economics is concerned with how societies produce, distribute, and consume the products and services that their citizens utilize. Science provides knowledge and discovery while Technology transforms that discovery into the implementation of a practical tool or system that improves an economy’s productive capacity.
The combined impact of science and technology on economies can be summarized as follows:
1. Increased productivity
2. Lower costs of production
3. Creation of new industries
4. Improved communication/transportation networks
5. Increased trade between nations
6. Improved healthcare and Education
7. More jobs created
Simply put, science generates ideas, while technology utilizes those ideas to create economic value.
1) Improving Productivity and Efficiency
One of the most significant contributions of technology to the economy is increased productivity. Companies are able to produce more products/services with less time and money than they were able to do so prior to the technological advances we have available to us today.
Examples include:
1. Automated machinery reducing the manual labor component of factory operations; 2) Cloud computing providing better operating processes for businesses; 3) Artificial intelligence expediting the decision-making process; 4) Agricultural technologies enabling farmers to create more crops.
Specific Example
Farmers are now able to produce a much larger crop using significantly fewer resources because of the advances in modern farming equipment (i.e., GPS guiding tractor technology, irrigation technology). Therefore, countries that are utilizing agricultural technologies throughout their agriculture sector tend to have a much greater food supply and thus are able to develop much stronger rural economies.
According to the international development organization the World Bank, countries with a greater level of technological adoption generally experience a much faster rate of growth in GDP than do those countries which still utilize an outdated agricultural system.
2) The New Industries and Job Opportunities
Technology and science generate new industries and jobs. For example, the app development, cryptocurrency service, and cloud computing industries barely existed twenty years ago. Today, technology-generated industries employ millions of people across the globe. New industries created by technology:
Artificial Intelligence (AI)
Renewable Energy
E-commerce
Cybersecurity
Biotechnology
Software Development
Digital Marketing
Example: E-commerce Transformation
Companies like Amazon and Alibaba created millions of new jobs in logistics/delivery, digital advertising, and software engineering by developing innovative technology for the international retail marketplace with the creation of online shopping platforms. Technology also allows small business owners to sell products globally without having to have a physical store.
3) How Technology Improves Communication and International Trade
Technology has significantly improved communication between businesses in different countries and has also lowered the cost and complexity of conducting international business transactions. For example, businesses are now able to:
Hold online meetings
Send money instantly
Market products globally
Manage global supply chains
Example:
A freelance worker from Somalia can now work remotely for clients located in the United States, Europe, or Asia because they have access to the internet. This type of opportunity for people in that part of the world was not available just a few decades ago. Digital payment systems like PayPal, mobile banking, and cryptocurrency have made it easier to conduct international business and have encouraged businesses in developing parts of the world to engage in international trade.
4) Advancements in Healthcare and Economic Stability
The impact of scientific study and technological advances in medicine to global economic development through improving the health of the public.
When a population is healthy, there is less absenteeism among employees, they are more productive, and their lifespan is greater.
Types of Health Innovations
Vaccines
Telemedicine
Robotic Surgery
Artificial Intelligence Diagnostics
Electronic Health Records
Expert Views
It is generally accepted by economists that the investment of resources toward healthcare technology will improve economies over time. As an example, as countries involved in the COVID-19 pandemic began to develop vaccinations for the disease, those countries with a highly developed capacity for scientific research were able to develop vaccines in a more expedient manner than others who were less advanced. These same countries recovered economically at a faster rate than the rest of the world.
In addition to improving public health, advances in medical technology create high-wage jobs in the pharmaceutical, biotechnology, and healthcare service sectors.
5) Educating and Developing Skills
Technology has revolutionized education in many ways, including online learning platforms, digital libraries, and virtual classrooms.
Students can access educational content from anywhere in the world.
Benefits
Access to remote learning
Affordable online courses
Faster access to research materials
Higher levels of digital literacy
Countries that support science and technology education are generally able to establish a stronger economy because their skilled workforce is attractive to overseas investment and innovation.
South Korea Case History
As a case history example, we can look at South Korea, which has made significant investments in its science and technology education system since the 1960s. South Korea has become one of the largest economies in the world by producing high-quality electronics.
Long-term investments in research and technological innovation have allowed companies like Samsung and Hyundai to establish themselves as global brands.
6) Fostering and Supporting New Business
Starting a new business can be challenging; however, with technology there may be less hurdles in getting started. Businesses can now be established on a much smaller scale due to the capabilities available online.
Examples
Social media marketing
Internet commerce sites
Mobile banking apps
AI tools for businesses
Remote employee collaboration tools.
A small business may sell a product using Facebook as a marketing tool, WhatsApp as a communication tool, and send payments online without needing to pay for office space to set up an office.
These all encourage people to participate in the economy while reducing unemployment rates.
Conclusion
The role of science and technology in economics cannot be overstated; they are instrumental to the development of industries, productivity and ultimately economic prosperity by improving health care delivery and education systems and facilitating global trade.
