General purpose technologies (GPTs) are technologies that can affect an entire economy

Economic system

An economic system is the combination of the various agencies, entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed...

 (usually at a nation

Nation

A nation may refer to a community of people who share a common language, culture, ethnicity, descent, and/or history. In this definition, a nation has no physical borders. However, it can also refer to people who share a common territory and government irrespective of their ethnic make-up...

al or global level). GPTs have the potential to drastically alter societies through their impact on pre-existing economic and social structures. Examples include the steam engine

Steam engine

A steam engine is a heat engine that performs mechanical work using steam as its working fluid.Steam engines are external combustion engines, where the working fluid is separate from the combustion products. Non-combustion heat sources such as solar power, nuclear power or geothermal energy may be...

, railroad, interchangeable parts

Interchangeable parts

Interchangeable parts are parts that are, for practical purposes, identical. They are made to specifications that ensure that they are so nearly identical that they will fit into any device of the same type. One such part can freely replace another, without any custom fitting...

, electricity

Electricity

Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...

, electronics

Electronics

Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...

, material handling

Material handling

-Material Handling Industry:Material Handling is the movement, storage, control and protection of materials, goods and products throughout the process of manufacturing, distribution, consumption and disposal. The focus is on the methods, mechanical equipment, systems and related controls used to...

, mechanization

Mechanization

Mechanization or mechanisation is providing human operators with machinery that assists them with the muscular requirements of work or displaces muscular work. In some fields, mechanization includes the use of hand tools...

, control theory

Control theory

Control theory is an interdisciplinary branch of engineering and mathematics that deals with the behavior of dynamical systems. The desired output of a system is called the reference...

 (automation

Automation

Automation is the use of control systems and information technologies to reduce the need for human work in the production of goods and services. In the scope of industrialization, automation is a step beyond mechanization...

), the automobile

Automobile

An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...

, the computer

Computer

A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...

, and the Internet

Internet

The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...

.

Lag

The introduction of a new GPT to an economy may, before improving productivity, actually decrease it:

• the obsolescence of old technologies and skills
• learning costs
• time required for development of new infrastructure
  Infrastructure
  Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
  
  
• readjustment of labor to new industries, causing temporary unemployment
  Unemployment
  Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
  
  

This initial inability to exploit the benefits of the new technology is known as the Solow Paradox

Productivity paradox

The productivity paradox was analyzed and popularized in a widely-cited article by Erik Brynjolfsson, which noted the apparent contradiction between the remarkable advances in computer power and the relatively slow growth of productivity at the level of the whole economy, individual firms and many...

.
New technology can also be isolating. The internet, originally created for faster communication between people, can cause you to search for someone random and foreign to connect with.

Government investment necessary to develop new general purpose technologies

In his book "Is War Necessary for Economic Growth?" Economics Professor Vernon W Ruttan of University of Minnesota argues that long term and large scale government investments are important in driving the development of general purpose technologies. Professor Ruttan analyzed the development of general purpose technologies in six areas and found that in all cases government financed projects had contributed to significantly speed up the development of new general purpose technologies, and in one case, nuclear power, the development had not been possible without large scale government funding.

The six areas analyzed and described by Professor Ruttan are:

- The US production system
- Aviation technologies
- Space technologies
- Information technology
- Internet technologies
- Nuclear power

New general purpose technologies in energy systems transformation

In the book Global Energy Transformation, author Mats Larsson refers to the work of Professor Ruttan and argues that large scale government programs for energy systems transformation will become necessary to drive the development of new energy technologies. Energy efficient technologies and infrastructures will become necessary to drive economic growth in a future situation after Peak Oil. The task of developing and implementing these technologies on a large scale will be too complex and demanding in terms of resources, for the market to drive this on its own.

Larsson refers to earlier large scale development programs and projects, to support his argument. One is the transformation of US industry to war production during the Second World War, the second is The Marshall Plan and the third is The Apollo Program. A similar government funded program will become necessary to transform global energy systems on a large scale.

See also

• General Purpose Technologies and Economic Growth Edited by Elhanan Helpman.
• ECONOMIC TRANSFORMATIONS:General Purpose Technologies And Long Term Economic Growth by Richard G. Lipsey, Kenneth I. Carlaw, Clifford T. Bekar