What is the difference between progress and development

technical progress

usually results from the dynamics of competition and is shown in
1. product improvements,
2. new products (innovation),
3. production innovations,
4. Increase in productivity (productivity) as a result of the use of new technologies or changes in the various organizational structures.

The technical progress is based on the further development of the technology. Technical progress can be seen in the introduction of new or improved materials and equipment, in the application of new or improved production processes or in the production of new or improved products. Technical progress is therefore input, throughput or output-oriented. Technical progress generally consists in the fact that the ratio between the output quantity and the factor input quantity, productivity, is improved and thus ultimately the ratio of performance to costs, the economic efficiency, is also greater. Law of Mass Production

Technical progress The technical progress represents the overall process of technical innovations, which can be broken down into the following sections: At the beginning there is the invention of new or improved + products or production processes as the realization of an idea or as the result of many years Research or development work (research and development, + human capital). The first use of the invention or discovery takes place in a second step, the + innovation. A distinction is made between product and process innovation. The third step consists of the general dissemination (diffusion) of the innovation, e.g. B. also through imitation (see also + technology transfer, r patent). It is related to the «opening up of new markets».

Because of its productivity-increasing effect (productivity), technical progress is assigned a decisive role as a growth factor by economics, since with the same amount of but qualitatively improved use of 4 production factors (input), the k output (output) can be increased. On the other hand, with the help of technical progress, an increase in productivity can also be achieved without increasing the output quantity by using fewer factors. The effects of “labor-saving” technical progress (e.g. through automation) on the labor market can prove to be problematic for the national economy. Savings in the economic production factors - capital and land, on the other hand, are economically advantageous if they are combined with the conservation of scarce natural resources (raw materials and energy sources) and a lower environmental impact. Attention should be drawn to the growth-promoting role of technical innovations in competition as a “dynamic process of advance and persecution”, which allows innovative and willing companies to gain advantages and reduces them again through imitation-willing and capable competitors (Schumpeter; Clark).

Development, introduction and expansion of improved, elimination of obsolete products, means of production and production processes in the course of the economic growth process. The difference between product and process innovation disappears in the macroeconomic analysis. If capital input, labor input and production volume are linked in a macroeconomic production function, then technical progress is expressed in a shift in input-output ratios in such a way that either with the same capital and / or labor input the amount of goods produced increases or with the same amount of goods the capital and / or Labor input decreases. This begs the question of how the rate of technical progress is to be determined. Three measurement concepts are discussed in growth theory. They are named after the authors who introduced these criteria into growth theory. · The Harrod rate of progress is the rate at which labor productivity increases over time while capital productivity is constant. · The Solow rate of progress is the rate at which capital productivity increases with constant labor productivity over time. · The Hicks rate of progress is the coincident growth rate of labor and capital productivity. If such a constellation exists for the respective production function, it is therefore possible to increase labor productivity with constant capital productivity, capital productivity with constant labor productivity or labor and capital productivity at the same rate, one speaks of -3 Harrod neutrality, Solow neutrality or Hicks neutrality of technical progress; Neutrality because a corresponding development of labor and capital productivity implies the constancy of the functional income distribution, the income ratios of capital and labor, if the real factor prices grow at the respective rate of neutral progress. In the macroeconomic theory of the equilibrium of growth, of these three conceptions, only the Harrod neutrality of technical progress plays a role. The growth theory has so far been limited to the analysis of the effects of technical progress. The few approaches to explaining the emergence of innovations explain the effects of progress in analogy to economies of scale or substitution effects. In one case, the rate of progress rises and falls with the growth rate of the capital input, the labor input or the production volume. In the other case, the rate of progress rises and falls with the growth rate of the real wage level (technical progress function). These attempts to explain the rate and direction of improvements in the production process in the context of macroeconomic growth models are only the first steps towards an economic theory of technical progress. The emergence, introduction and spread of new products, means of production and production processes can basically only be adequately represented and discussed on a micro and not on a macroeconomic level. Literature: Walter, H., The technical progress in the newer economic theory, Berlin 1969.

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