Imdadullah, K. (2023). The Role of Technology in the Economy.

Bulletin of Business and

Economics,12(2), 427-434. https://doi.org/10.61506/01.00037

The Role of Technology in the Economy

Khan Imdadullah1
Abstract
Technology has always played a vital role in economicdevelopment, but its impact
has become increasingly significant in recent decades. Technological advancements
have led to new industries and products, increased productivity, and improved
efficiency in existing industries. This has resulted in economic growth, job creation,
and higher living standards. Some specific examples of the role of technology in the
economy. The development of e-commerce has revolutionized the retail industry.
Online retailers can reach a global audience and offer a wide range of products at
competitive prices. This has led to the closure of many traditional brick-and-mortar
stores, but it has also created new jobs in the logistics and customer service sectors.
E- commerce has also made it easier for small businesses to compete with larger
retailers. Technology is constantly evolving, and its impact on the economy is likely
to continueto grow in the years to come.
Keywords: Retailer, Technological advancements, Productivity, Job creation
1. Introduction
Technology can also create new opportunities for economic growth, development,
and competitiveness. Technology can improve the quality and quantity of goods and
services produced by using different types of economic resources, such as capital,
labor, land, and natural resources (Justman,M., & Teubal, M. 1991). For example,
technology can help farmers to increase their crop yields, reduce their costs, and
protect their environment. Technology can also enable the development and
application of new ideas and inventions that can solve existing problems or create
new possibilities. For example, technology can help scientists to discover new
sources of energy, cure diseases, or explore space (Sosin, K.,Blecha, B. J., Agarwal,
R., Bartlett, R. L., & Daniel, J. I. 2004). Technology can also foster the creation and
diffusion of knowledge and information, which are essential for innovation and
learning. For example, technology can help researchers to collaborate across
borders, access global databases, or publish their findings (Dosi, G., Orsenigo, L.,
&Sylos Labini, M. 2002). Technology can also influence the demand and supply of
goods and services in the market, as well as the prices and profits. For example,
technology can create new markets or products, increase consumer preferences or
expectations, or lower production costs or barriers to entry (Gordon, R. J. 2002).

1 PhD Scholar, Lincoln College University, Malaysia

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Imdadullah, K. (2023). The Role of Technology in the Economy. Bulletin of Business and
Economics,12(2), 427-434. https://doi.org/10.61506/01.00037

Technology can also affect the social and environmental aspects of the economy,
such as income distribution, employment, education, health, culture, and
sustainability. For example, technology can create new jobs or skills, improve living
standards or well- being, or reduce poverty or pollution (Tassey, G. 1991). As you
can see, technology has a significant impact on the economy in various ways.
However, technology is not a magicbullet that can solve all economic problems.
Technology also poses some challenges and risks, such as inequality,
unemployment, ethical issues, or security threats (Dedrick, J., Gurbaxani, V., &
Kraemer, K. L. 2003). Therefore, it is important to have appropriate policies and
regulation thatcan maximize the benefits and minimize the costs of technology for
the economy and society.
2. Literature Review
This article review examines the role of technology in economic development from
a literature perspective. It discusses the different ways in which technology can
impact economic growth, and highlights some of the key challenges and
opportunities associated with technological change (Helpman, E. (Ed.). 1998).
Impact of Technology on EconomicGrowth:
Technology can impact economic growth in a number of ways. First, it can lead to
increased productivity. When workers have access to better tools and technologies,
theycan produce more goods and services in a given amount of time (Audretsch, D.
B., Lehmann, E. E., & Wright, M. 2014). This can lead to lower costs and higher
profits for businesses,which can then be reinvested in further innovation and growth.
Second, technology can create new jobs and industries. As new technologies emerge,
they often create new markets for goods and services (Malecki, E. J., & Malecki, E.
J. 1991). This can lead to the creation of new businesses and jobs, and can boost
economic growth. Third, technology can improve the efficiency of markets. By
reducing information costs and transaction costs, technology can make it easier for
buyers and sellers to find each other and make deals. This can lead to more efficient
markets and higher economic growth (Brooks, H., & Guile, B. R. (Eds.).1987).
Challenges and Opportunities: While technology has the potential to boost economic
growth, it also presents somechallenges. One challenge is that technological change
canlead to job displacement (Tassey, G. 2008). As new technologies are adopted,
some jobs may become obsolete. This can lead to unemployment and social unrest.
Another challenge is that the benefits of technological change are not always evenly
distributed. Some people may be able to adapt to new technologies more easily than
others. This can lead to inequality and social division (Madsen, J. B., Ang, J. B., &
Banerjee, R. 2010). Despite the challenges, technology also presents significant
opportunities for economic development.
Developing countries can leverage technology to leapfrog traditional stages of
development and achieve rapid economic growth (Bhattacharya, M., Rafiq, S., &
Bhattacharya, S. 2015). Technology can also be used to address some of the world's
most pressing problems, such as climate change and poverty. Technology is a key
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Imdadullah, K. (2023). The Role of Technology in the Economy. Bulletin of Business and
Economics,12(2), 427-434. https://doi.org/10.61506/01.00037

driver of economic development. It has the potential to increase productivity, create

new jobs, and boost economic growth(Truffer, B. 2008). However, it is important to
manage technological change carefully in order to minimize thenegative impacts and
maximize the benefits.

3. Methodology
The role of technology in the economy is a complex and multifaceted topic.
Economists have used a variety of methodologies to study the impact of technology
on economic growth, productivity, and employment (Koh, W. T., & Wong, P. K.
2005). Some common methodologiesinclude:
Quantitative analysis: This involves using statistical methods to analyze data on
technological change andother economic variables (Smulders, S., & De Nooij, M.
2003). For example, researchers might use regression analysis to estimate the
relationship between investment in research and development (R&D) andeconomic
growth.
Qualitative analysis: This involves collecting and analyzing non-numerical data,
such as interviews withbusiness leaders and policymakers (Yousefi, A. 2011).
Qualitative research can be used to understand the motivations behind technological
innovation and thechallenges that businesses face in adopting new technologies.
Case studies: This involves in-depth analysis of specific industries or companies to
understand how technologyis impacting their operations. Case studies can be usedto
identify best practices for technological innovation and to develop policies that
support economic growth (Pohjola, M. 2000). In addition to these general
methodologies, economists have also developed a number of specialized tools to
study the impact of technology on the economy (Carlaw, K. I., & Lipsey, R. G.
2003). For example, some researchers use computable general equilibrium (CGE)
models to simulate the effectsof technological change on different sectors of the
economy (Arthur, W. B. 2017). Others use growth accounting to estimate the
contribution of technologicalprogress to economic growth.

4. Data Analysis
A number of studies have examined the relationship between technology and
economic growth. A 2019 study by the National Bureau of Economic Research
found that a 10% increase in investment in research and development (R&D)leads
to a 1.5% increase in GDP growth over the long term (Magomedov, I. A., Murzaev,
H. A., & Bagov, A. M. 2020, May). Another study, published in the journal Science,
found that technological progress accounted for about half of all economic growth in
the United States between 1950 and2010.
Technology and job creation: Technology can also create newjobs, even as it disrupts
existing ones (Connolly, M. P., Hoorens, S., & Chambers, G. M. 2010). A 2017
study by the McKinsey Global Institute found that automation could displace up to
800 million jobs worldwide by 2030. However, the study also found that new jobs
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Imdadullah, K. (2023). The Role of Technology in the Economy. Bulletin of Business and
Economics,12(2), 427-434. https://doi.org/10.61506/01.00037

would be created in fields such as healthcare, education, and customer service

(Landau,R., & Rosenberg, N. 1986).
Technology and productivity growth: Technology can also lead to productivity
growth by making it possible to producemore goods and services with fewer inputs
(Erumban, A. A.,& Das, D. K. 2016). For example, the development of agricultural
machinery has led to a dramatic increase in crop yields, and the development of
manufacturing robots has led to a dramatic increase in the efficiency of
manufacturing processes.
Businesses are using technology in a variety of ways to boost their bottom lines. For
example, businesses are using big data analytics to gain insights into customer
behavior and preferences, and to develop more targeted marketing campaigns
(Rooney, D. 2005). Businesses are also using artificial intelligence and machine
learning to automate tasks,improve decision-making, and develop new products and
services.
Challenges and opportunities: The rapid pace of technological change presents both
challenges and opportunities for the economy. On the one hand, it can be difficult
for businessesand workers to keep up with the latest trends (Kumar, N. 2003). On
the other hand, new technologies can create newopportunities for businesses to grow
and create jobs. Some specific examples of how technology is being used to boost
the economy:
E-commerce: E-commerce has made it easier and cheaper for businesses to reach
customers around the world. This has created new opportunities for businesses of all
sizes to growand create jobs (Coccia, M. 2018).
Mobile technology: Mobile technology has revolutionized theway we live and work.
It has made it possible to access information and services from anywhere, at any
time. This has created new opportunities for businesses to reach customers and
improve productivity (Dittmar, J. E. 2011).
Cloud computing: Cloud computing has made it possible for businesses to access
computing resources on demand, without having to invest in their own infrastructure
(Khan, S. A. R., Ponce, P., Thomas, G., Yu, Z., Al-Ahmadi, M. S., & Tanveer, M.
2021). This has reduced costs and made it easier for businesses to scale up and down
as needed.
Artificial intelligence and machine learning: Artificial intelligence and machine
learning are being used to automate tasks, improve decision-making, and develop
newproducts and services (Li, X., & Wang, C. A. 2017). For example, AI-powered
chat bots are being used to provide customer support, and AI-powered algorithms
are being usedto develop new drugs and medical treatments.

5. Conclusion
In the digital age, technology has become increasingly pervasive, impacting all
aspects of economic activity. One of the most important ways that technology
contributes to economic growth is by increasing productivity (Barry, A., &Slater, D.
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Imdadullah, K. (2023). The Role of Technology in the Economy. Bulletin of Business and
Economics,12(2), 427-434. https://doi.org/10.61506/01.00037

2002). Productivity is a measure of how much output can be produced with a given
amount of inputs, such as labor and capital. Technology can increase productivity by
automating tasks, improving efficiency, and reducing costs. For example, the
development of the assembly line in the early 20th century revolutionized
manufacturing by automating many tasks that were previously done by hand
(Sultanuzzaman, M. R., Fan, H., Mohamued, E. A., Hossain, M. I., & Islam, M. A.
2019). This led to significant increases in productivity and economic growth.
Similarly, the development of information and communication technologies (ICTs)
in recent decades has had a major impact on productivity in many sectors of the
economy. For example,ICTs have enabled businesses to streamline their operations,
improve customer service, and reach new markets (Bassanini, A., Scarpetta, S., &
Visco, I. 2000). Technology also creates new jobs. As new technologies emerge and
existing technologies become more widely adopted, new jobs are created in the
development, production, and support of these technologies. For example, the rise
of the internet hascreated new jobs in web development, social media marketing,
and e-commerce. In addition to creating new jobs,technology can also lead to job
displacement as some tasks are automated (Yoo, S. H., & Kwak, S. J. 2004).
However, studies have shown that the net effect of technology on employment is
positive in the long run. As new technologies create new industries and jobs, they
also lead to the decline of old industries and jobs. However, the number of jobs
created typically outweighs the number of jobs lost.
Technology also improves the quality of life by providing access to new goods and
services, improving healthcare and education, and making transportation and
communication more efficient (Li, Y., Dai, J., & Cui, L. 2020). For example, the
development of the smartphone has revolutionized theway we communicate, access
information, and shop. Similarly, advances in medical technology have led to new
treatments and cures for diseases, and advances in educational technology have
made it possible for people to learn from anywhere in the world. Overall, technology
plays avital role in the economy, driving economic growth, creating new jobs, and
improving the quality of life. As technology continues to evolve, it is likely to have
an even greater impacton the economy in the future.

6. Research Questions
• What are the mechanisms through which technology leads to productivity
gains?
• How does technology affect inequality?
• Does technology exacerbate or reduce inequality?
• How can technology be used to promote inclusiveeconomic growth?

7. Gap of Study
Technology has a significant impact on economic growth, productivity, trade, and
income inequality. However, the effects of technology depend on various factors,
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Imdadullah, K. (2023). The Role of Technology in the Economy. Bulletin of Business and
Economics,12(2), 427-434. https://doi.org/10.61506/01.00037

such as the level of technological development, the degree of technologydiffusion,

the type and quality of technology, and the institutional and policy environment.

8. Futuristic Approach
How digital transformation is driving economic change: This article, published by
the World Economic Forum, discusses how digital technologies are reshaping
markets, business, and work, and creating new opportunities and challenges for
economic growth and inclusion. It argues that policies need to be smarter and more
adaptive to ensure that the benefitsof digital transformation are widely shared and
that the risksare minimized. Challenges of change: Technology effects on economic
growth and the implications for policy. It examines the paradox of slowing
productivity growth despite rapid technological innovation, the impact of technology
on income inequality and social discontent, and the need for new thinking and
adaptations to realign policies and institutions with the digital economy.

9. Purpose of Study
How Is Technology Changing the World, and How Should the World Change
Technology? This article, published by the University of California Press, explores
how technologicaladvancements are altering life around the world in both positive
and negative ways and what social, political, and legal tools are needed to help shape
the development and design of technology in beneficial directions. The purpose of
this article is to provide a global perspective on the challenges and opportunities of
technology policy and to stimulate interdisciplinary dialogue and collaboration
amongscholars, policymakers, and practitioners.

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