Technology, for economists, is anything that helps us produce things faster, better or cheaper. When you think of technology there’s a good chance you think of physical things like big machines or fast computers. But when economists talk about technology, they’re thinking more broadly about new ways of doing things. In this sense, processes like assembly line production or creating medical vaccines are considered technologies. Even social or political things like language, money, banking, and democracy are considered technologies.
One of the main reasons economists use this broad definition of technology is that it makes it easier to figure out where economic growth is coming from. One popular way of thinking about growth argues that growth can come from just three places. One is more people working, often because of population growth. Another is new investments in things needed for production, like machines, roads or even education, that economists call capital. The rest—anything that allows people to produce more without more workers or investment—is labeled ‘technology’.
And as you might expect, an awful lot of economic growth is the result of technological progress; one famous estimate says about 88 percent.¹ That makes technology quite important for understanding how the economy got to where it is today, and where it might go in the future.