The Potential for Productivity Growth Unleashed by the an Increasingly Technologically Based Economy

Rapid technological change has been a prominent concern for policy makers over the last two decades. But now, in the wake of Covid-19, these considerations are more dominant than ever – presenting both challenges and oppertunities. We face the imminent threat of a catastrophic economic recession. However, digital technology is currently seen as one of the major solutions to boosting the UK‚’s pre-existing productivity growth issue. Covid-19 has meant that demand for work-orientated technologies has sky-rocketed. This represents how the shock of the pandemic has forced people to adopt new working techniques, breaking the inertia normally present in human behaviour. For example, almost half of the UK‚’s workforce now uses technology to allow them to work from home (DCMS, 2020). With this inertia overcome, we stand a greater chance of achieving the productivity growth made possible by an increasingly technologically based economy. Furthermore, the behavioural adaptation has spurred a huge amount of R&D into the technology industry – as expected by the fundamental law of supply and demand. This momentum needs to be nurtured and encouraged in-order to capture the productivity growth required if we are to bounce-back from this recission. However, in order to full capitalise on this opportunity, the government needs to step in. Not only my we use policy tools to encourage further investment into technological research, but we need stronger action to upskill the workforce and closing the digital divide. Without a workforce that is equipped with both specialist and basic technological skills, the opportunity that this increased momentum behind the desire and acceptance of technological change, brought about by the pandemic, will be lost.

(DCMS) Department for Digital, Culture, Media & Sport, 2020, Digital Secretary’s closing speech to the UK Tech Cluster Group [online] Available: Accessed: 14/01/2021




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