Technology and development
The significance of technological change to economic growth and development has been verified again and again in empirical studies. The endogenous growth theories considered in Chapter 8 and in the World Bank study (1993) of the East Asian economies confirmed these results. Even the research based on neoclassical growth models has found that the basic factors of production, capital, and labor, cannot explain all of economic growth. It is often the “residual,” that is, the unidentified variables which contribute to increased productivity, including technology, organization, and institutional structures, which carry the weight of “explaining” economic growth over time and the differences among countries. In this chapter, we consider in more detail what is meant by technology, what preconditions are required if a country is to make effective use of technology as the structural transformation process proceeds forward, and what countries need to do to take better advantage of the ever-expanding world pool of technological opportunities.