Evaluate the view that economic growth is best achieved through improvements in technology

Economic growth refers to an increase in real GDP (or output) and can be achieved in a number of ways not only including an improvement in technology but also attempts at improving the human capital of an economy and reductions in unemployment. Technological improvements are mainly improvements to the physical capital of an economy, and thus are often machinery or technical equipment related developments.   Improvements in technology represent an improvement in the quality of resources that are available to an economy and thus an improvement in the factors of production. This results in a rightward shift of the LRAS curve, as depicted in the first diagram, all highlighting the increase in potential output. This will result in a more efficient workforce leading to greater productivity and increased output and thus economic growth. However, such improvements require investment in both research and development and manufacturing, both of which highlight an apparent opportunity cost associated with the project. Spending on these investments may be more efficiently used in improving the human capital of the economy with spending on reducing unemployment via education and training projects which may be able to better adjust individuals to the requirements of the global job market whilst also being able to improve the future capabilities of the workforce, potentially allowing an improvement in the productions possibilities of the economy, showed by the second diagram, and thus lead to further economic growth. However, each individual country will face a different problem. For example, certain countries such as South Africa, who have a very high unemployment rate of 26.6%, may be better off suited to try to tackle economic growth via training programmes to try and better adapt individuals to find jobs, in this way reducing the structural unemployment of an economy, which will undoubtedly lead to economic growth. However, embracing technological change as seen best by the emerging economies in the East, including China’s adoption of smart factory technology, have resulted in special economic zones and extremely competitive firms who prosper in today’s interconnected global economy, and have allowed such countries (like China) to grow at rates close to 10% a year for the past 20 years. Overall, if government budgets are able to be balanced then a combination of projects may be best suited to improve the economy and it is clear that policies must be adapted to the economic climate to achieve maximal success and economic growth.