General-purpose technology

General-purpose technologies (GPTs) are technologies that can affect an entire economy (usually at a national or global level).[1][2][3] GPTs have the potential to drastically alter societies through their impact on pre-existing economic and social structures. The archetypal examples of GPTs are the steam engine, electricity, and information technology. Other examples include the railroad, interchangeable parts, electronics, material handling, mechanization, control theory (automation), the automobile, the computer, the Internet, medicine, and artificial intelligence, in particular generative pre-trained transformers.

In economics, it is theorized that initial adoption of a new GPT within an economy may, before improving productivity, actually decrease it,[4] due to: time required for development of new infrastructure; learning costs; and, obsolescence of old technologies and skills. This can lead to a "productivity J-curve" as unmeasured intangible assets are built up and then harvested. [5] Impending timeframe to utilize the latent benefits of the new technology is deemed a trade-off. Spin-out firms/inventors from organizations that had developed GPTs play an important role in developing applications for GPTs. However, it has been observed that the level of cumulative innovation in GPTs diminishes as more spin-outs into application development occur.[6]

Historical GPT according to Lipsey and Carlaw

Economists Richard Lipsey and Kenneth Carlaw suggest that there have only been 24 technologies in history that can be classified as true GPTs.[7] They define a transforming GPT according to the four criteria listed below:

is a single, recognisable generic technology
initially has much scope for improvement but comes to be widely used across the economy
has many different uses
creates many spillover effects

Since their book, more GPTs have been added for the 21st century.

A GPT can be a product, a process or an organisational system.

Foundational

The earliest technologies mentioned by Lipsey and Carlaw occur before the Neolithic period and have not been cast as GPTs, however, they are innovations that the other 24 rely upon.

	Classification	Date
Spoken Language	process	Pre-10,000 BC
Clothing	product	Pre-10,000 BC
Mastery of fire	process	Pre-10,000 BC
Coil pottery	product	Pre-10,000 BC
Weapons (sharp-edged tools)	product	Pre-10,000 BC

Expanded list of 25 technologies

GPT	Spillover Effects	Date	Classification
Domestication of plants	Neolithic agricultural revolution	9000-8000 BC	process
Domestication of animals	Neolithic agricultural revolution, working animals	8500-7500 BC	process
Smelting of ore	early metal tools	8000-7000 BC	process
Money	trade, record keeping	9000–6000 BC	process
Wheel	mechanization, potter's wheel	4000–3000 BC	product
Writing	trade, record keeping, poetry	3400-3200 BC	process
Bronze	tools & weapons	2800 BC	product
Iron	tools & weapons	1200 BC	product
Water wheel	inanimate power, mechanical systems	Early Middle Ages	product
Three-masted sailing ship	discovery of the New World, maritime trade, colonialism	15th century	product
Printing	knowledge economy, science education, financial credit	16th century	process
Factory system	Industrial Revolution, interchangeable parts	late 18th century	organisation
Steam Engine	Industrial Revolution, machine tools	late 18th century	product
Railways	suburbs, commuting, flexible location of factories	mid 19th century	product
Iron steamship	global agricultural trade, international tourism, dreadnought battleship	mid 19th century	product
Internal combustion engine	automobile, airplane, oil industry, mobile warfare	late 19th century	product
Electricity	centralized power generation, factory electrification, telegraphic communication	late 19th century	product
Automobile	suburbs, commuting, shopping centres, long-distance domestic tourism	20th century	product
Airplane	international tourism, international sports leagues, mobile warfare	20th century	product
Mass production	consumerism, growth of US economy, industrial warfare	20th century	organisation
Computer	Digital Revolution, Internet	20th century	product
Lean production	Growth of Japanese economy, agile software development	20th century	organisation
Internet	electronic business, crowdsourcing, social networking, information warfare	20th century	product
Biotechnology	genetically modified food, bioengineering, gene therapy	20th century	process
Nanotechnology	nanomaterials, nanomedicine, quantum dot solar cell, targeted cancer therapy	21st century	product

Steam engine increased labor productivity annually by 0.34%; IT by 0.6% (1995–2005); robotics by 0.36% (1993–2007).[8]

GPT in military and defense-related procurement

In his book, Is War Necessary for Economic Growth?: Military Procurement and Technology Development, Vernon W. Ruttan, Regents Professor Emeritus in the Department of Applied Economics at the University of Minnesota, examines the impact of military and defense-related procurement on U.S. technology development.[9] Ruttan identifies the development of six general-purpose technologies:

Interchangeable parts and mass production
Military and commercial aircraft
Nuclear energy
Computers and semi-conductors
The Internet
The space industries

Based on his reading of the histories of these technologies, Ruttan finds that military and defense-related procurement has been a major source of technology development. He believes that the current technological landscape would look very different in the absence of military and defense-related contributions to commercial technology development. However, from his research, Ruttan determines that commercial technology development would have occurred in the absence of military procurement but more slowly, e.g., the aircraft, computer, and Internet industries. He cites nuclear power as an example of a general-purpose technology that would not have developed in the absence of military and defense-related procurement.

References

Landes, David S. (1976). The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from ... At the University Press.
Rosenberg, Nathan (1982). Inside the Black Box: Technology and Economics. Cambridge University Press. ISBN 9780521273671. editions:rcZYDd5BgC0C.
Bresnahan, Timothy F.; Trajtenberg, M. (1995-01-01). "General purpose technologies 'Engines of growth'?" (PDF). Journal of Econometrics. 65 (1): 83–108. doi:10.1016/0304-4076(94)01598-T.
Liao, Hailin; Wang, Bin; Li, Baibing; Weyman-Jones, Tom (2016-09-01). "ICT as a general-purpose technology: The productivity of ICT in the United States revisited". Information Economics and Policy. 36: 10–25. doi:10.1016/j.infoecopol.2016.05.001. ISSN 0167-6245. S2CID 26020335.
Brynjolfsson, Erik; Rock, Daniel; Syverson, Chad (2021). "The Productivity J-Curve: How Intangibles Complement General Purpose Technologies". American Economic Journal: Macroeconomics. 13: 333–372. doi:10.1257/mac.20180386.
Shimizu, Hiroshi (2019). General purpose technology, spin-out, and innovation: technological development of laser diodes in the United States and Japan. Advances in Japanese business and economics. Singapore: Springer. ISBN 978-981-13-3714-7.
Lipsey, Richard; Kenneth I. Carlaw; Clifford T. Bekhar (2005). Economic Transformations: General Purpose Technologies and Long-Term Economic Growth. Oxford University Press. pp. 131–218. ISBN 978-0-19-928564-8.
Muro, Mark; Andes, Scott (16 June 2015). "Robots Seem to be Improving Productivity, Not Costing Jobs". Harvard Business Review.
Ruttan, Vernon (2006). Is War Necessary for Economic Growth?: Military Procurement and Technology Development. New York: Oxford University Press. ISBN 978-0-19-518804-2.

External links

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
Usage History of Industrial Robotics from IFR
Paperless office adoption statistics – 2015
Installed solar capacity and solar employment growth – 2015

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[1] Landes, David S. (1976). The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from ... At the University Press.

[2] Rosenberg, Nathan (1982). Inside the Black Box: Technology and Economics. Cambridge University Press. ISBN 9780521273671. editions:rcZYDd5BgC0C.

[3] Bresnahan, Timothy F.; Trajtenberg, M. (1995-01-01). "General purpose technologies 'Engines of growth'?" (PDF). Journal of Econometrics. 65 (1): 83–108. doi:10.1016/0304-4076(94)01598-T.

[4] Liao, Hailin; Wang, Bin; Li, Baibing; Weyman-Jones, Tom (2016-09-01). "ICT as a general-purpose technology: The productivity of ICT in the United States revisited". Information Economics and Policy. 36: 10–25. doi:10.1016/j.infoecopol.2016.05.001. ISSN 0167-6245. S2CID 26020335.

[5] Brynjolfsson, Erik; Rock, Daniel; Syverson, Chad (2021). "The Productivity J-Curve: How Intangibles Complement General Purpose Technologies". American Economic Journal: Macroeconomics. 13: 333–372. doi:10.1257/mac.20180386.

[6] Shimizu, Hiroshi (2019). General purpose technology, spin-out, and innovation: technological development of laser diodes in the United States and Japan. Advances in Japanese business and economics. Singapore: Springer. ISBN 978-981-13-3714-7.

[7] Lipsey, Richard; Kenneth I. Carlaw; Clifford T. Bekhar (2005). Economic Transformations: General Purpose Technologies and Long-Term Economic Growth. Oxford University Press. pp. 131–218. ISBN 978-0-19-928564-8.

[8] Muro, Mark; Andes, Scott (16 June 2015). "Robots Seem to be Improving Productivity, Not Costing Jobs". Harvard Business Review.

[9] Ruttan, Vernon (2006). Is War Necessary for Economic Growth?: Military Procurement and Technology Development. New York: Oxford University Press. ISBN 978-0-19-518804-2.