Transcript 12.3 Issues of Technological Change

12.3 Issues of
Technological Change
Objectives
 Discuss the impact of research and
development on the standard of living.
 Explain the relationship between
technological change and employment
levels.
 Describe industrial policy, and the
arguments for and against its use.
CONTEMPORARY ECONOMICS
© Thomson South-Western
12.3 Issues of
Technological Change
Key Terms
 basic research
 applied research
 industrial policy
 cluster
CONTEMPORARY ECONOMICS
© Thomson South-Western
12.3 Issues of Technological Change
SLIDE
3
Research and Development
Improvements in technology arise from
scientific discovery, which is the product of
research.
Economists distinguish between basic
research and applied research.
CONTEMPORARY ECONOMICS
© Thomson South-Western
12.3 Issues of Technological Change
SLIDE
4
Basic and Applied Research
Basic research is the search for
knowledge without regard to how that
knowledge will be used; a first step toward
technological advancement.
Applied research seeks answers to
particular questions or applies scientific
discoveries to develop specific products.
CONTEMPORARY ECONOMICS
© Thomson South-Western
12.3 Issues of Technological Change
SLIDE
5
R&D Comparisons
Across Countries
 Investment in R&D reflects the economy’s efforts
to improve productivity through technological
discoveries.
 One way to track R&D spending is to measure it
relative to gross domestic product, or GDP.
 The United States devotes relatively more
resources to R&D than most other advanced
economies.
 This results in a higher standard of living for
Americans.
CONTEMPORARY ECONOMICS
© Thomson South-Western
12.3 Issues of Technological Change
SLIDE
6
R&D Spending as a Percentage of GDP for
Major Economies During the 1980s and 1990s
Figure 12.7
CONTEMPORARY ECONOMICS
© Thomson South-Western
12.3 Issues of Technological Change
SLIDE
7
Technological Change
and Employment Levels
Technological change and labor
productivity
Technological change and employment
levels across countries
CONTEMPORARY ECONOMICS
© Thomson South-Western
12.3 Issues of Technological Change
SLIDE
8
Industrial Policy
Government involvement
Identifying industry clusters
Pitfalls of picking technological winners
CONTEMPORARY ECONOMICS
© Thomson South-Western