Technology & Innovation

Technology, for economists, is anything that helps us produce things faster, better or cheaper. When you think of technology there’s a good chance you think of physical things like big machines or fast computers. But when economists talk about technology, they’re thinking more broadly about new ways of doing things. In this sense, processes like assembly line production or creating medical vaccines are considered technologies. Even social or political things like language, money, banking, and democracy are considered technologies.

Innovation is the process of creating new technologies and using them in the economy. Economists usually use a very broad definition of technology, so when we’re talking about innovation, we’re not just thinking about new machines or inventions, but any new way of doing things.

The Industrial Revolution was the period when machines first became really important to the economy. Starting around 1760 in England and running till about 1850, a huge string of innovations and new technologies dramatically reshaped (or ‘revolutionized’) the economy.

New technology is not inherently good or bad. When economists talk about technology, they are thinking very broadly about anything that helps us produce things faster, better or cheaper. In this sense, technology is always better for someone, as it wouldn’t be considered technology if it wasn’t useful in solving an existing problem or meeting a new want. The problem is that often the effects of new technologies are much better for some people than others.