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Recent Comments
Does every innovation in production technology really help economic prosperity, especially in developing and underdeveloped countries?
If power outages occur frequently, they create resource constraints. Therefore, during a power outage, innovations that depend on electricity can create excess capacity in a production unit because the technology cannot operate without its main resource. In this situation, some advanced technologies may actually become resource-constraint-creating technologies.
Through my recent publication ([https://doi.org/10.1038/s41598-026-65979-3]), I extended this argument and proposed a simple way to identify technology in terms of two categories:
Resource-constraint-creating technology
Resource-constraint-resolving technology
Imagine a machine that depends on a main resource—such as electricity—to function properly.
A solar PV system, for example, can be identified as a resource-constraint-creating technology in certain situations. Solar PV depends on solar light as its main resource. At night, on cloudy days, or when dust, aerosols, or snow reduce solar radiation, the availability of its main resource becomes constrained.
We cannot control darkness, clouds, snowfall, or dust particles in the atmosphere. Therefore, these conditions create a constraint on solar light, which is the main resource required for solar PV technology to generate electricity.
When solar light is constrained, solar PV cannot generate enough power. This can create a power constraint, which can then cause electrical machines and other production technologies to stop functioning.
Then what about wind turbine technology? Can wind turbines be identified as a resource-constraint-resolving technology?
The economic answer can be yes—but with a condition.
Wind turbines can help resolve the power constraint if they are installed in an identified wind corridor where wind is sufficiently continuous, smooth, stable, and available across different weather conditions and seasons. Wind is the main resource required for a wind turbine to generate electricity.
If the wind resource is sufficiently continuous, power generation can become more reliable and less disrupted. As a result, other machines and production activities can continue to function.
Therefore, researchers and scientists should think carefully before creating new advanced production technologies. We should ask whether a new technology, in the real world, will become another resource-constraint-creating technology or a resource-constraint-resolving technology.
Only after considering this resource constraint can economists properly examine whether an innovation for particular new advanced innovated technology can contribute to economic prosperity.
I agree that not every innovation in production technology necessarily contributes to economic prosperity. From the perspective of the history of economic thought, the economic effects of technological change depend not only on the technical characteristics of an invention but also on the institutional and resource conditions in which it is adopted.
For instance, in the Scottish Enlightenment, innovation is not simply the creation of an isolated individual or machine; it emerges from a social and institutional environment that determines whether new knowledge and inventions can actually be transformed into productive economic activity.
This perspective is particularly relevant for developing and underdeveloped economies. An advanced technology may increase productivity under one set of conditions but generate new bottlenecks under another. For example, an electricity-dependent machine may be highly productive where electricity supply is reliable, but during frequent power outages the same technology can produce idle capacity and disrupt production. Thus, technological progress can sometimes shift rather than eliminate resource constraints.
The distinction between resource-constraint-creating and resource-constraint-resolving technologies is therefore very useful. A technology should not be considered economically beneficial merely because it is technically more advanced. We should ask whether the technology complements the resources and infrastructure that are actually available. In the case of renewable energy, for instance, a wind turbine may help resolve electricity constraints where wind conditions are sufficiently reliable, but it may not do so where the wind resource is intermittent or poorly matched to demand. The same technology can consequently have very different economic consequences in different locations.
The Jevons paradox provides an additional reason for being cautious about equating technological efficiency with economic prosperity or resource conservation. Jevons argued that improvements in the efficiency with which a resource is used can reduce its cost and consequently increase its overall consumption. Historically, improvements in the efficiency of coal use in industry did not simply reduce coal consumption; they contributed to expanding coal-dependent production and ultimately increased total consumption.
This means that an innovation can have a positive microeconomic effect—for example, reducing the amount of electricity required per unit of output—while simultaneously producing broader effects that increase demand for energy or other constrained resources. Technological efficiency therefore does not automatically imply sustainability or greater welfare.
I would therefore modify the central question slightly. Instead of asking whether an innovation is inherently beneficial, economists should ask: Under what resource, institutional, infrastructural, and economic conditions does a particular innovation contribute to prosperity?
From this perspective, innovation is neither automatically resource-saving nor automatically growth-enhancing. Its consequences are context-dependent. A genuinely development-enhancing technology should ideally reduce existing constraints, complement local capabilities and institutions, and avoid creating new bottlenecks that undermine its productivity gains.
Thus, the distinction between resource-constraint-creating and resource-constraint-resolving technologies is a useful contribution, but the final assessment should be dynamic rather than binary. A technology that resolves one constraint may create another, and an efficiency improvement may generate additional demand through the Jevons effect. Economic prosperity therefore depends not simply on producing more advanced technologies, but on developing technologies that are compatible with the resource and institutional structure of the economy in which they are deployed.