1.4.8 Technological Change

Inventions and Innovations

Inventions: the creation of entirely new and original products, processes or ideas that have not existed before.

e.g. the invention of the telephone.

Innovation: the process of developing an existing product, process or idea to improve it, make it more efficient, or adapt it for a new purpose by adding new features.

e.g. the development of smartphones from the original telephone.

Technological Change and Production

Technological change can lead to improvements in production methods, productivity and efficiency.

• Improved productivity: improved technology may speed up the production process, allowing firms to produce more output with the same amount of inputs. e.g. automated chocolate bar production lines can produce more chocolate bars per hour than manual production lines.
• Efficiency and waste reduction: new technology can help firms use resources more efficiently, reducing waste and lowering costs. e.g. precision agriculture technology can reduce the amount of water and fertiliser needed for crops.
• Lower costs of production: technological advancements can reduce the cost of producing goods and services. e.g. automated machinery can lower labour costs in manufacturing.