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Chapter 3

The Sources of Technological Change

Overview:  This chapter describes how technological change occurs through dramatic breakthroughs as well as slow, cumulative change.  It also surveys the forces that encourage or hinder technological advance.
  • Technological innovations can come about as the result of dramatic breakthroughs:

    A major breakthrough can come from

    • An inventor
    • An entrepreneur.
    • A scientist
  • Technological innovations also result from gradual, cumulative changes or by combining several innovations.

  • R&D: Research and Development: The  process of making technology work
    • Research is the basis for technological process, but rarely results in useable products.
    • Development: process of making technological innovation useable and marketable.
    • Scaling up is the process of  making the transition from a successful research result to large-scale production.
  • A technological innovation can occur because of the availability of technological components that allow the resolution of a fundamental problem.
  • Advances also come through emergence of technologies in different, but related areas. i.e. the technological solution arrived at by one industry is applicable to the problems of another industry.

  • Demand pull theory: Technology may be pushed by great breakthroughs or slow change, but it must also be pulled by effective demand:  there must be a demand for the product and there must be an ability to pay for it.
    • It is often difficult to judge the demand for a product
    • Sometimes demand is belated.

  • A market economy driven by the activities of self-interested businessmen ahs produced the most receptive environment for technological innovation.
    • Promises financial rewards to those able to meet needs of consumers
    • Competition forces one to produce a better product at lower cost.
    • Effective in production of auxiliary items necessary for technological innovation.
  • Primary non-economic forces that encourage economic changes are the military and medical demands.

Study Questions:

1. Give an example of an inventor and an entrepreneur who were responsible for major breakthroughs in technological innovations.

2. Describe how a technological innovation came about by a slow, cumulative process.

3. What is meant by the term "effective demand?"

4. Why is a free market economy conducive to technological innovation?

5. What is Research and Development?

6. Give at least two examples of non-economic forces that encourage technological innovations.


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