Technological Advancements o Synthetic Materials

Industrial Revolutions  Transportation

 A period of development in the later half of the o Automobile
18th century o Airplanes
 Process of change from one economy to  Communication
another o Telegraph
 Involved technological, socioeconomic, and o Telephone
cultural aspects  Organization Structure
 Occurs when technological change o Factory System
fundamentally transforms the way in which a Third Industrial Revolution
society carries out the production and  New Source of Energy
distribution of goods o Nuclear Power
Inventions  New Production Process
 Discover of new products and processes. o Computerization
o Machines o Robotics
o Telephone o Automation
o Automobiles  Connectivity
o Television o Television
o Computers o Internet
Innovations Introduction
 Commercialization and improvement of  The rise of information and communication
existing products. technologies (ICT)- that is, computers, software,
o Assembly Lines telecommunication and the internet- and the
o CD’s large impact that these new technologies are
o Flat Screen TV’s having on the way that society functions, have
o Smartphones prompted many to claim that we have entered
Product Innovation a new era.
 Creation of a new product. General Purpose Technology
 “External Innovation”  It is a technology of sufficiently wide application
Process Innovation to be used in various parts of the economy and
 Improvement in the efficiency of a process. whose impact is pervasive.
 “Internal Innovation” Main Characteristics of GPT (Lipsey et al., 1998)
First Industrial Revolution  It must have a wide scope for improvement and
 1760-1850 elaboration
 Concentrated in Britain  It must be applicable across a broad range of
 Significant evolution: Cort’s puddling, Rolling uses
process for making iron, Crompton’s mule for  It must have a potential use in a wide variety of
spinning cotton, Watt steam engine products and processes
 Started in England during the late 18th century.  It must have a strong complementarities with
 Spurred a shift in focus of industry. existing or potential new technologies
 Initially focused on textile manufacturing. The Effect of Technology on Productivity
 Manual (Human) Labor → Mechanical Labor  Productivity: It is an indication of the efficiency
 Vegetables → Minerals of production or distribution. Labor productivity
 Rural → Urban can be measured as output produced per hour
 New Energy Sources of labor.
 Transportation  Example: Consider an automobile factory that is
 Production Efficiency able to produce 10 cars per day using 100 hours
 Spread of Wealth and Knowledge of labor. If a new invention permits same
Second Industrial Revolution workers to produce 20 cars in the same amount
 Production Process of time, then their productivity has been
o Assembly Line doubled.
 New Products
  The productivity of the whole economy such as Prices and Industrial Change
Egypt Economy is calculated as follows:  How can we look at price changes over time in
 Calculate the total output produced by the industries in which the product undergoes
economy in one year (GPD or Gross Domestic many changes, especially in early stages?
Product).  We use the concept of price index. Indices are
 Divide total output by total labor hours in the used a lot in economics. They are basically a
year. This gives you the labor productivity. simple way of measuring change.
Example Computation for Productivity  Price index is a measure of the average level of
 If a group of workers produces 10,000 units of prices for some specified set of good and
output in one year, and 12,000 units the next services, relative to the prices of a specified
year. Calculate the percentage increase in base period.
productivity. 20%  The most widely used method of constructing
 Calculate the percentage increase in an index is based on the notion of the
productivity if the output expands from 12,000 percentage.
in year 2 to 15,000 in year 3. 25%  Example:
Division of Labor and Productivity o Suppose that the price of a product is
 The division of labor refers to the degree to SR5 in 2000 and SR7.5 in 2001 and SR10
which the various tasks involved in the in 2002.
production of a good service are divided among o In this simple example, our market
different workers. basket consists of only one product.
 Productivity increases when the division of Selecting year 2000 as the base year we
labor increase. Increases in productivity can be can express the prices in years 2001 and
transmitted throughout the economy for 2002 relative to the price in ear 2000 as
several reasons: follows:
o Increase in productivity can lead to a o The price in 2000 (base year) is equal to
higher incomes for an economy’s 100 per cent
citizens. o Price index, year 2001 = SR7.5/ SR5 .
o Increases in productivity tend to lower 100 = 150
the cost of production, because more o Price index, year 2002 = SR10/ SR5 . 100
output can be produced with the same = 200
amount of inputs. Eventually, increases
in productivity tend to reduce prices
The Industry Life Cycle
 The industry structure refers to the
characteristics of an industry, such as the
number of firms operating in it, the distribution
of power between them (whether some are
very large), and the degree to which new firms
find it easy to enter the industry).
 The industry life cycle is characterized by the
following phases:
1. A pre-market or hobbyist phase, in which the
product is produced more as a hobby or luxury
that for commercial purposes.
2. An introductory phase, in which the product
begins to be produced more for commercial
purposes that for hobby reasons.
3. A growth phase in which the industry grows
rapidly due to the emergence of a standardized
product.
4. A mature phase, in which demand slackens and
fewer technological opportunities are available.