general purpose technologies

Abstract

Economists have long been interested in how technological change affects long-run growth and aggregate fluctuations, yet it remains most often treated as incremental in nature, adding only a trend to standard growth models. History tells us, however, that such change can appear in bursts, with flurries of innovative activity following the introduction of a new core technology. This observation leads economists to reserve the term ‘general-purpose technology’ (GPT) to describe fundamental advances that drive these flurries, which in turn transform both household life and the ways in which firms conduct business. Over the past 200 years or so, steam, electricity, internal combustion, and information technology (IT) seem to have served as GPT-type technologies. They affected entire economies. Earlier, the very ability to communicate in writing and later to disseminate written information via the printed page also appears to fit well into the idea of a GPT.