Academic journal article Journal of Economic and Social Studies

Technological Progress as a Generator of Economic Growth and Development

Academic journal article Journal of Economic and Social Studies

Technological Progress as a Generator of Economic Growth and Development

Article excerpt

Introduction

For decades, technological progress has been considered the key pillar of economic development in the world. Consequently, investment in research and development should be the primary goal of every company in B&H, and also the state.

The progress and success of one country largely depends on science and technology, research and innovation, but if one wants to talk about the existence of high-quality research and technological competitiveness it is necessary to have sufficiently good educational system, i.e. educated workforce, young scientists, researchers, and so on. However, a good educational system implies the existence of active support and protection by the state! B&H cannot boast with high quality education and with much care to invest in scientific research activities, new technologies, inventions and inventors. The reason why the educational system, research, and thus technological progress in Bosnia and Herzegovina, is in such a desperate position is the lack of adequate support from the state.

Finland can be mentioned as a good example of success and taking care of human capital, education, investing in innovation. In the period 1991 - 1995, Finland increased investment in science and education for incredible 82%! The results were impressive. In 1991, Finland was a country with serious problems1, but in 2000 it realized a budget surplus of 7% and an unemployment rate of 10%. Thanks to investment in education and new technologies, Finland regenerated and significantly increased its technological competitiveness, which was driven by rising exports and industrial production. Here, we speak about industry based on information technology (IT industry), innovation and education, i.e. knowledge economy11.

Position of the EU, in this field is not very good, compared to the rest of the world. For many years, the EU has been trying, by size of funds for investment in research and development, to catch up with the U.S. and Asian countries especially111. It suffices to say that in the top twenty companies in the world, by number of innovations, EU has only two firms - German Siemens and Finnish Nokia. It should be mentioned that the lead story on this topic belongs to companies from the U.S., followed by Japan and South Korea. Consequently, EU decision to establish "Innovation Union" is no surprise. The main task of "Innovation Union" will be to raise competitive readiness of the EU compared to the rest of the world in the field of technological progress, i.e. investment in research and development.

Therefore, it is necessary for B&H to begin to follow the path already headed by Finland, Turkey, China, India and so on. It is necessary to pay more attention to education, scientific research, new technologies, as well as to prevent the outflow of "brains" from Bosnia and Herzegovina.

The fact is that progress in the field of new technologies and technological progress in B&H is not possible without adequate help and support from the state. Bosnia and Herzegovina has a very small investment in science, research and development, and therefore it is very important that the already meager funding available is not put into the wrong hands. Help from the state should primarily be directed towards firms (entrepreneurs) who are willing to invest their capital in research and development, employment, local and regional development, in order to stimulate economic growth and technological progress. What are these companies? Which market structures do they belong to? The first part of this paper will try to provide an answer to these questions, in order to give guidance in which direction the government support should be directed when it comes to research, innovation and technological progress. In fact, all major research and analyses carried out in this area are based on the hypothesis of Schumpeter (1928, 1942), which is based on the fact that most of the innovations are implemented by large companies (monopolies). …

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