Technology and Economic Growth in the 21st Century

Michael Levine, San Bernardino Valley College,

Summary

In this activity, students consider the role technology plays in raising productivity and thereby spurring economic growth. They will consider some landmark inventions of the 21st century, and discuss whether they have lead to productivity increases of if they will evenutaly lead to increases in productivity.

Learning Goals

Students will be able to explain the relationship between technological progress, productivity, and economic growth.

Context for Use

Students will have read or viewed a lecture on the aggregate production function and the role technology plays in economic growth. Students and have listened to Planet Money Episode 772: Small Change. It may be useful to ask students to complete a worksheet or quiz to ensure they listened to the podcast.

Overview

In a Principles of Macroeconomics course, students learn the determinants of the aggregate production function and the role technological progress has in sustained economic growth. In Planet Money Episode 772: Small Change, Robert Gordon tackles the notion that "the world is changing faster than every" stating that economic growth is slowing due to the lack of changes, particularly in technology.

In this activity, students will consider some landmark inventions of the 21st century, and discuss whether they have lead to productivity increases of if they will lead to increases in productivity.

Information Given to Students

Technology_and_EconomicGrowth.docx (Microsoft Word 2007 (.docx) 13kB Jan28 20)

The following question has no explicit right or wrong answers. You are to discuss your opinions as a group and jot down your answers as well as your justification. I will randomly select one of your team members to answer for your group when we discuss these as a class.

1) In the Planet Money Episode 772: Small Change you heard that despite the popular sentiment that technology is changing more rapidly than ever before, the relative stagnation of productivity altering technology is responsible for the slowdown of economic growth in the United States. Consider the following inventions from the 21st Century. Rank them from having the most positive impact on productivity to the smallest (or negative) impact. Your rankings should consider both the current impact on productivity and the impact toward the future.

A. Social Media
B. Cryptocurrencies
C. Mobile operating systems (smartphone technology)
D. 3D Printing
E. Self-driving car developments
F. Online streaming

2) Are there any inventions (readily available or on the horizon) you have heard of that are not on this list that you think have impacted productivity.

Teaching Notes and Tips

Make sure to guide students into talking about the future when considering productivity. The thesis of the podcast was that the lack of general purpose inventions (electricity, internal combustion engine, computers) in the last several decades have limited economic growth. Ask students if they feel this is permanent, or if they think long-term high economic growth could return.

Assessment

Essay or assignment question: As recently as the 1980's annual GDP growth regularly was above 5% and quarterly growth would top 10%. Why is there belief that growth like that is unrealistic for the foreseeable future in the US?