The Effects of Technology on Economic Growth in the US

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Table of Contents

Introduction
Implications on the Economic System
Unintended Consequences
Impact on Personal Life
Conclusion
References

Introduction

The world economy has majorly changed over the last century. Various elements have impacted the way business operates, develops, and maintains competitiveness in global and national markets. However, it is essential to acknowledge the major effects that technology has generated over the years. For example, automatization during the Industrial Revolution improved production and decreased limitations such as the inability to produce large quantities of goods and the complete reliance on human force. However, automatization was the beginning of a greater industrial shift created through technological development. Data collection and storage, cooperation between supply chain actors, globalization, economic predictions based on analysis, and multiple similar aspects have become possible due to the growing technology sector. However, despite the positive outcomes followed by the development, several negative implications have been facilitated. In this paper, economic growth will be discussed from the perspective of technological advancements. Moreover, the phenomenon will be assessed in regard to the unintended consequences and impacts on people’s personal lives, which will allow for a comprehensive understanding of adverse and beneficial implications.

Implications on the Economic System

The current economic system is entirely reliant on technology. Each sector, including education, construction, infrastructure, healthcare, and banking, use technology to a certain extent. According to researchers, technological advancements directly correlate both with economic prosperity and human development (Broughel & Thierer, 2019). There are several implications that lead to such a conclusion. Initially, it is vital to consider the background of the US economy. Researchers mention that almost 90% of that was on the Forbes list for the most success in 1950 do not operate anymore (Subramanian & Balanagarajan, 2018). However, the companies that are currently most successful and innovative, namely Amazon, Google, Facebook, and Apple, are directly reliant on technological advancements. Moreover, the capital of this corporation is not based on raw materials but on human capital. Hence, the current economic environment encourages utilizing intellectual resources rather than repurposing raw materials, a change that has become possible during the last century. Under these conditions, entrepreneurs can start a business based on an idea, and, if it has potential, said individual will achieve economic success. Such notions are major economic drivers linked to the phenomenon in which each person can become a business owner and economic driver due to the current advances in tech.

Another reason why the companies that were successful more than 70 years ago could not remain strong on the market is the need for competition, which is partly generated through technology. According to researchers, corporations and organizations are to be innovative in order for consumers to invest in their products (Marshall & Parra, 2019). There are several elements linked to tech and competition as a symbiotic relationship. On the one hand, companies are more likely to have rivals as there are multiple actors providing similar products in most sectors. Thus, technology has partly allowed more businesses to advertise their products, which directly affects competition. On the other hand, consumers are able to access information in regard to the goods offered by multiple rivals. Thus, the competitors invest in media coverage, aim to decrease prices, and are focused on quality improvement, which is all notions related to tech development.

An additional way in which the economy has changed is the ability to accurately assess markets, their profitability, and potential risks correlating with operations in a specific sector. Namely, researchers highlight that one of the ways in which the economy has become more prosperous is through research processes (Tassey, 2019). It is especially important for American companies that operate on a multi-national level. The presence of databases and current information on the political, economic, and social systems in different countries allows business analysts to determine whether entering a new market will be profitable. However, the same phenomenon can be applied when it comes to the national level. For example, retail stores examine locations, product preferences, and consumer characteristics through technological advancements. As a result, they minimize risks of financial loss and facilitate circumstances in which the business process is smooth and relatively risk-free. Data, which is technologically stored and examined, has significantly benefited business owners in regards to the establishment of strategies that create more revenue, which directly impacts the national economy as the influx of finances is partially invested back into the federal treasury.

New technologies have also impacted the job market. On the one hand, the skills that employers are looking for have changed, but so have the wages. Thus, an individual proficient in the IT domain will be reimbursed for the knowledge they utilize in a particular company. Moreover, multiple new positions have been created due to technologization. It is also important to note that remote work has become an adequate substitute for the in-office measure most organizations employ (Burgess & Connell, 2020). Hence, this allowed the economy to be somewhat stable even during health crises such as the COVID-19 lockdown, in which the government restrictions have facilitated social isolation and quarantines. However, the possibility to work from home, which multiple employees had due to tech advances, has helped maintain a level of economic stability despite the external challenges.

Needless to say, the idea that technology has become one of the primary economic drivers is well-supported with evidence. It is essential to highlight the theoretical background aligning with the argument. Namely, the endogenous growth theory developed by Paul Romer was awarded a Nobel Prize in Economics in 2018 (Zhao, 2019). The theory implies that economic growth depends on internal factors rather than external ones, which directly correlates with the idea that emerging technologies have had a significant implication in this dynamic. The framework highlights that corporations that focus on investments in tech innovation and human capital are more likely to achieve economic success compared to organizations merely focused on the political and socio-economic environment in which said entities operate.

Unintended Consequences

As mentioned previously, multiple positive consequences have materialized due to the technological advancements that have been generated during the last century. However, it is important to mention the ones that have negatively impacted the economy and have been both an inconvenience and an unexpected result of tech improvement. On the one hand, as mentioned previously, the phenomenon has led to the creation of new jobs on the market. However, it is essential to note that while certain jobs have been created, several became useless under the conditions of the new economy. According to researchers, the job market has changed, with specific positions becoming redundant (Burgess & Connell, 2020). Thus, individuals with distinct skills became less likely to be employed due to the newer qualities and characteristics employers look for, such as someone tech-savvy. Moreover, automatization has increased the reliance on machines for mass production, which also negatively affects laborers.

Moreover, it was previously noted that the opportunities for remote work had had a particularly beneficial effect during COVID-19. However, the positive implications correlate with several negative outcomes. One of the main ones is the work-and-life balance, which has become somewhat disrupted (Burgess & Connell, 2020). Individuals who operate remotely are less likely to have a strict division between work and personal life, which leads to adverse consequences when it comes to both elements. On the one hand, interruptions and disruptions during the work process decrease productivity and efficiency. On the other hand, it becomes easy to overlay the two and not have a distinct professional life that does not necessarily interact with the personal one. As a result, individuals may be both less productive and more work-oriented after their workday, which negatively impacts families, relationships, and social interactions.

Another unintended consequence is linked to the fact that multiple companies closed down due to the emerging technologies currently in place. As previously mentioned, the corporations that were responsible for most production and service providers have been replaced by tech companies (Subramanian & Balanagarajan, 2018). The lack of need for the goods and services provided through the aforementioned organization has generated circumstances in which certain entities do not fit in the current market. However, the consequence correlates both with negative and positive results. On the one hand, the economy suffers as corporations are closing down, and individuals who operate in said organizations may experience unemployment. On the other hand, new emerging companies and start-ups within the tech realm positively affect the economy and facilitate an influx of foreign and national investments. Both outcomes, however, are inevitable due to the market dynamics and the everchanging trends. At this particular point in history, it is unavoidable that organizations are to focus on innovation as their primary driver to fulfill consumer needs and desires. Thus, corporations that either does not focus on innovation or operate in a less profitable field by today’s standards are less likely to have long-term success and the ability to illustrate resilience to the dynamics of consumer requirements.

Impact on Personal Life

Regarding personal life, emerging technologies have changed multiple elements concerning how people communicate, interact, and share information. It has been highlighted earlier that people working remotely meet barriers in differentiating their professional and personal spaces. However, both positive and negative consequences have followed after the tech sector has become a major implication in people’s lives. Social media, in particular, is to be discussed concerning day-to-day life activities. Social media platforms have minimized the distance that made communication difficult between people. However, several adverse consequences have occurred due to its widespread use. For example, mental health has been declining, a notion that experts partly link to the aforementioned phenomenon. Thus, research highlights that young girls, in particular, experience difficulties in regard to their mental well-being, which correlates with the intensive use of social media platforms (Limone & Toto, 2022). The findings may correlate with the negativity experienced both directly and indirectly or unrealistic expectations when it comes to one’s appearance and lifestyle.

On the other hand, it is vital to illustrate a positive effect. Namely, the communication barrier has been combated as individuals are able to interact despite physical distance or other challenges. An example is a piece of research highlighting that technology minimizes feelings of loneliness and isolation in older people (Budak et al., 2021). Individuals who may be far away from families and friends or have problems establishing social connections are more likely to engage in online conversations and communicate with loved ones. However, online communication limits the physical understanding of the interaction. Namely, the researchers highlight that individuals primarily using technology to communicate in their personal lives is challenged with distinguishing destructive and constructive social relationships (Pandya & Lodha, 2021). For example, receiving or sending negative commentary may be perceived as less damaging due to the idea that the opposite party is behind the screen rather than face-to-face. As a result, individuals may not be able to construct health interactions in person. This was especially significant during the recent lockdown when all communication was experienced through technology. However, face-to-face discussions are accompanied by non-verbal language, which is challenging to interpret when most of the interactions prior to that have been exemplified through the use of social media.

Conclusion

Technology has had a major impact on all segments, including the economy and the social context. On the one hand, it has shaped the market by prioritizing tech companies instead of organizations primarily working with raw materials. Moreover, data analysis, market predictions, and a shift in the job segment are several other consequences followed by tech advances. On the other hand, multiple corporations and jobs have become redundant. In regard to people’s personal lives, people primarily interact through the use of technology, namely, social media platforms. The notion correlates with decreased loneliness yet has resulted in negative mental health consequences and healthy social communication.

References

Broughel, J., & Thierer, A. D. (2019). Technological Innovation and Economic Growth: A brief report on the evidence. SSRN Electronic Journal.

Budak, K. B., Atefi, G., Hoel, V., Laporte Uribe, F., Meiland, F., Teupen, S.,… Roes, M. (2021). Can technology impact loneliness in dementia? A scoping review on the role of assistive technologies in delivering psychosocial interventions in long-term care. Disability and Rehabilitation: Assistive Technology, 1-13.

Burgess, J., & Connell, J. (2020). New Technology and work: Exploring the challenges. The Economic and Labour Relations Review, 31(3), 310-323.

Limone, P., & Toto, G. A. (2022). Psychological and emotional effects of digital technology on Digitods (14–18 years): A systematic review. Frontiers in Psychology, 13.

Marshall, G., & Parra, Á. (2019). Innovation and competition: The role of the product market. International Journal of Industrial Organization, 65, 221-247.

Pandya, A., & Lodha, P. (2021). Social connectedness, excessive screen time during COVID-19 and mental health: A review of current evidence. Frontiers in Human Dynamics, 3.

Subramanian, K. P., & Balanagarajan, K. (2018). Exponential entrepreneurs: Entrepreneurs achieving exponential growth through digital technology and innovation – a review. International Journal on Recent Trends in Business and Tourism, 2(4).

Tassey, G. (2019). Regional Technology-based economic development: Policies and impacts in the U.S. and other economies. Annals of Science and Technology Policy, 3(1), 1-141.

Zhao, R. (2019). Technology and economic growth: From Robert Solow to Paul Romer. Human Behavior and Emerging Technologies, 1(1), 62-65.

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