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Role of Technology in Economic Development

Meaning of Technology:

By technology, we mean “the body of scientific and technical knowledge which is used to improve production process”.

In other words, “technology is knowledge or technique to facilitate the production of goods and services”.

Technological Progress and Economic Development:

Technological progress is the most important source of economic growth. It has been a major in stimulating the long-term economic growth in developing and developed countries of the world. We can say this is human heritage available to all count Irrespective of the country which first developed particular technology.

New and improved ways to complete the economic social tasks such as; grow crops, making cloth, construction and means of transport etc., are the result of technological progress. Technology comes into a country in two ways i.e., (a) Invention (b) Innovations.


The creation of new production techniques, process and new products which can be developed into the usable process, and products through innovation. The invention is n important means for a firm to improve its competitive position over rival suppliers by enabling it to lower supply costs and prices to consumers and to provide consumers with improved products.


The practical refinement and development of an original invention into a usable technique or product. Innovation is also an important mean for a firm to improve its competitive position over rival suppliers by enhancing its product differentiation and for improving market performance.

Importance of Technology:

Technology is important due to the following reasons:

Increase in Labour Productivity:

With the use of technology, the productivity of labour increases. If we take the example of the agriculture sector, we see a farmer can work more than ten farmers with the help of a tractor.

Increase in National Output:

As labour productivity Increases, the production level of a country also increases This causes an Increase In the national income of a country.

Increase in Human Capital:

Human capital means a skilled and educated labour force. When we increase the use of technology the skills in labour also increase, it leads to human capital formation.

To Overcome the Vicious Circle of Poverty:

We have discussed that with the use of technology income of a country increases and capital formation also increase, it helps to break the vicious circle.

Less Wastage o Inputs:

Technology helps in removing wastage of inputs in production. It is possible to have more output with the same inputs in the presence of technology. Here we can take the example of flour mill.

Better Quality:

When we use technology or machines it causes a big improvement in the quality of the products. If we take the example of the textile industry, it shows that the quality of machine-made cloth is better than the hand made.

Better Living Standard:

We judge the living standards by per-capita income and facilities to enjoy life. By the use of technology, national income and per-capita income increase, this leads to a better living standard.

Economies of Scale:

Economics of scale mean advantages, which are attached to high production levels. As we know with the use of technology production increases, this cause decreases in cost and increase in profit.

Rapid Increase in Supply:

According to “Keynes“, rapid increase in supply is possible with the help of technology. If the demand for a commodity increase, it is possible to match the demand with the help technology. It removes the danger of inflation.


According to “Galbraith“, as the use of technology increases in a society, the specialization also increases. This results in an increase of national income and per-capita income.

More International Trade:

The basis of international trade is “a country exchanges its excess production with the excess production of another country.” So, with the use of technology production international trade also increase.

Obstacle to be overcome

before adopting such technology by less developed countries such as:

Lack of appropriate knowledge:

Lack of appropriate knowledge is one of the main obstacles to the implementation of technology in LDCS. The government should take serious steps to overcome this hurdle by making arrangements to spread the required knowledge.

Sufficient capital is not available:

Sufficient capital is not available in LDCS. It is not possible for these countries to purchase modern tools and machinery for improvements in the production process. Expensive capital goods like tractors, harvesters and threshers are not affordable for poor nationals of LDC’s.

Lack of attention towards modem infrastructure:

Lack of attention towards modem infrastructure is also another obstacle to implement technology in LDCS. Heavy investments are required by the public authorities to provide the necessary infrastructure e.g., electric power supply, canal irrigations, transport and communication system etc.

Sound administration:

Sound administration is a requisite to implement technology all over the world but unfortunately, LDCs are suffering from a shortage of such experts due to the number of reasons like, poor education system, lack of training institutes etc., To adopt modern tools and techniques government should take effective measures to enhance the administrative skills in the country to get the maximum benefits of available modern technology in different sectors like agriculture, industry. transport and communication etc.


With reference to the above discussion, it is clear that technology plays a vital role in the economic development of any country. It is not only playing a role in the agriculture and industrial sectors but in every field of life, it has a remarkable contribution. But due to various obstacles mentioned above, it is no contributing effectively towards the process of economic development. Govt. should take serious steps to overcome these obstacles.

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