General purpose technology

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General purpose technologies (GPTs) describe great leaps of innovation that can affect an entire economy (usually at a national or global level). Unlike traditional technologies, which economists view as a smooth advancement, GPTs are drastic advancements that redefine society. Examples are the steam engine, railroad, electricity, electronics, the automobile, the computer, and the Internet.

[edit] Lag

The introduction of a new GPT to an economy may, before improving productivity, actually decrease it:

• the obsolescence of old technologies and skills
• learning costs
• time required for development of new infrastructure
• readjustment of labor to new industries, causing temporary unemployment

This initial inability to exploit the benefits of the new technology is known as the Solow Paradox.

[edit] See also

• General Purpose Technologies and Economic Growth Edited by Elhanan Helpman.
• ECONOMIC TRANSFORMATIONS:General Purpose Technologies And Long Term Economic Growth by Richard G. Lipsey, Kenneth I. Carlaw, Clifford T. Bekar