How does technology affect an economy's productivity?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Technology generally increases the productivity in an economy.

To understand why this is so, let us look at what productivity is.  Productivity is a measure of how much in the way of value the workers in an economy can produce for each manhour worked.  If your workers create a lot of value each hour that they work, you have high productivity.

So let's look at agriculture to see how technology improves productivity.  Imagine a person going along trying to harvest wheat using only a sickle.  They have to do everything by hand and that takes a very long time.  So for each hour the person works, he will only produce a very little bit of harvested grain.  Now give the person a combine and he can harvest maybe 100 times more than he could have before.  His productivity has gone up 100 times.

So technology generally increases the level of productivity in an economy.