Introduction
Education is one of the ways to increase efficiency in using technology. Productivity relies on efficiency and technology. Computers have complemented the skills of those that are educated. Technology enhances productivity, which accounts for income differences between countries. Technology removes the limit set by diminishing marginal returns because it changes how factors of production are combined. A society needs to increase both physical capital and human capital to lead to a long-term steady growth. Increasing physical capital alone will reach a point where economic growth stops because of disparity in the factors of production. The main way in which governments can assist its people is through education systems.
Analysis
The article states that “the main way in which governments can help their people through this dislocation is through education systems.”1 Dislocation refers to the act of people being replaced by machines at the workplace. Automation results in fewer people required to complete a task. As more automation is taking place, more people will be displaced in the short run. Weil explains that computers have complemented the skills that the educated have, increasing their productivity, and income.2 Education provides a method to increase the development of new technology through human capital accumulation. It also provides a way of increasing productivity by increasing efficiency and augmenting technology as a combination of inputs.
Technology enhances productivity, which accounts for income differences between countries3. Weil explains that development accounting refers to the technique of finding out the differences in income attributed to productivity. Countries with high levels of technology have higher productivity levels. In the two-country model, Weil explains that the growth rate of the country that leads in technology and the one that lags behind are equal.
The company that leads incurs the cost of R & D, and the country that copies has a lower cost in copying. The country that leads has more workers under R & D, which does not contribute to the final output directly. Countries that engage in R & D realize a rise in the number of intangible assets, which offer an opportunity for jobs.4 The technology developed by the leading country is able to sustain both the economic growth of the country developing technology, and the user of technology. The developing country will rely on sales of physical capital and intangible assets to create new jobs.
Efficiency measures how effectively the factors of production and technology have been combined.5 Productivity is a function of efficiency and technology. Efficiency relies on using the least inputs to give the highest output. As a result of efficiency, adopting automation tends to displace workers, but automation increases a firm’s long-term earnings. The article explains that “although technology may kill some jobs, it creates new and better ones.”6 The goodness of the new jobs that technology creates is measured by their productivity, and higher incomes.
Technology removes the limit set by diminishing marginal returns because it changes how factors of production are combined.7 Fewer workers are able to give the same output as before when they use a new form of technology. The displaced persons can only be absorbed into new job positions created by new technology if they are educated.
The article indicates that to gain competitiveness a country has to adopt technology, even if today’s unemployment rate is increased by technology in the short run. A firm that fails to acquire new technology may its market share in the long run because a firm with higher productivity will be able to absorb its human capital and customers because it operates more efficiently. The article explains that it takes time for industries developed under a new technology to grow. In the long run, they will be able to create jobs new jobs for those who are displaced by adoption of new technology.
Conclusion
Education is a necessary combination for a country to have a long-term steady economic growth. Education provides an opportunity to acquire technical skills, which are essential to work with new technology. Productivity brought about by technology may increase the number of people who are middle-income earners. It takes a long time before industries created under new technology to develop before they can absorb more workers. A country or a firm is likely to lose more workers in the long run if it fails to adopt new technology by losing business opportunities to firms and countries with higher productivity and efficiency.
Bibliography
Hackler, Darrene. Cities in the Technology Economy. New York: M.E. Sharpe, 2006. Web.
Weil, David. Economic Growth. New York: Pearson/ Addison-Wesley, 2013. Web.
“Technology and Jobs: Coming to an Office near You”, The Economist, 2014. Web.
Footnotes
1 “Technology and Jobs,” 2.
2 “Technology and Jobs”, 2.
3 Weil, Economic Growth, 187.
4 Hackler, Cities in the Technology Economy, 25.
5 Weil, Economic Growth, 268.
6 “Technology and Jobs”, 1.
7 Weil, Economic Growth, 202.