1.

Neoclassical school of thought

b. The role of technology in promoting economic growth

- Robert Solow and Trevor Swan first proposed the neoclassical growth theory in 1956.

- The theory is that economic growth is the result of three factors: labor, capital, and technology.

While an economy has limited resources in terms of capital and labor, technology's contribution
to growth is limitless.

- Neoclassical economists find consensus among different economic views, all of which hold that
technological change is the main driver of economic growth. For example, neoclassicists have
historically pressured some governments to invest in innovation-driven scientific development
and research.

=> Innovation leads to the development of new technologies to ensure sustainable growth:
Recycled products, and clean energy (wind, solar power, nuclear). This helps to increase
economic efficiency as well as protect the environment and the community.

2. Keynesian school of thought

a. Define Technology and innovation

Joseph Schumpeter points out that it is impossible to analyze the dynamics of capitalism and its
development with models that assume constant technology. He defines innovation as:

(1) The introduction of new goods or new quality goods

(2) New production method

(3) Opening new markets

(4) Discover new sources of raw materials

(5) Implement new organization in any industry

=> Schumpeter's view of technological change is more realistic than the neoclassical view,
although it also has its limitations
b. The role of technology in promoting economic growth

Innovation in the form of knowledge and creativity expressed in the form of technology through
investment in new capital. Thus, effective demand shifts and the accompanying cyclical
volatility, signaled through returns as a response coefficient to the investment function,
establishes innovation success.

- A country's ability to participate in global trade and growth depends on its capacity for
technological, social, and organizational innovation.

- The sign of the new knowledge economy is at the heart of innovation for competitiveness and
the international division of work... Innovation leads to the creation of products, processes, fields
new areas, and activities, and promotes structural change, thereby encouraging more innovation.

- The result is an efficient growth cycle that reflects an increasing appreciation for knowledge-
based value added.

- Many economists agree that innovation is a key element of economic growth and that these
economies have specific characteristics that characterize the technological behavior of
companies. For this reason, and given that markets do not guarantee a smooth process of
technological progress, it is considered necessary to have public policies that favor the creation
and diffusion of technology.