How Technology Has Shaped the Economy

How has tech-driven productivity improved the overall economy? originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights.

Answer by Marco Annunziata, Chief Economist, General Electric Co., on Quora.

Productivity has always been the engine of growth. Most importantly, productivity is the key driver of per-capita growth, which results in better living standards.

Before the industrial revolution, economic growth was essentially zero - because there was no technology. Tech-driven productivity in the industrial revolution boosted economic growth until the 1970s, then it fizzled out. The first IT revolution gave us another spurt of growth in 1995-2005. Then the crisis hit. Now productivity growth languishes even as innovation moves faster than ever.

There is a very lively debate. Some economists argue that innovation can no longer boost productivity and growth. They say that US growth is over (and the rest of the world will stop too once they have adopted all the same technology), that we are stuck in a secular stagnation.

I couldn't disagree more.

Digital technologies have started to enter into industry in a big way. At GE we have called this the industrial internet. It creates efficiency and greater productivity across industries. Greater energy output from wind farms. Less fuel consumption for airplanes. The ability to do preventive maintenance, condition-based: you go and fix the machines only when needed and exactly when needed, avoiding breakdowns and downtime. These innovations will bring a tremendous acceleration of productivity.

They need to scale. Over the last few years investment has been weak. As it accelerates, these new technologies will be adopted at a faster pace, and we will see the impact on a macro scale.

Not to mention the positive impact on our quality of life from new innovations in health care, or from the ability to create "smart cities" by leveraging lighting as a digital nervous system; or the safer and more productive jobs created by advanced manufacturing.

So i strongly believe that tech-driven productivity will continue to improve the overall economy by creating greater efficiency, more jobs, and a better quality of life. And i think the impact we will see over the next 5 years, as new digital innovations spread across large sections of the economy, will dwarf what we've seen over the past twenty. The digital revolution in the consumer sector has already been transformational--now it is coming to industry

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