General Purpose Technology – What Is It and Why Does It Matter?
To understand General Purpose Technology (GPT), it’s helpful to understand what it is not. GPT is not sector-specific or company-specific. It’s not a piece of equipment or software that can only be used in one particular industry or by a specific company. Rather, GPT is a technology that can be used across industries and sectors to achieve various goals.
How GPTs Have Impacted the World’s Economies
GPT can affect an entire economy on a national or global scale. Some well-known examples of GPTs include the steam engine, electricity, and information technology. But first, we’ll look at how GPT has impacted the world’s economies throughout history.
The Impact of GPTs on Productivity and Economic Growth
In economics, the initial adoption of a new GPT within an economy may decrease productivity before increasing it. It has the potential to drastically change societies through its impact on pre-existing economic and social structures and needs time to develop new infrastructure and learning costs. However, rapid productivity growth and economic expansion typically occur once these costs are incurred and the latest technology is widely adopted.
This was certainly the case with the steam engine. When it was first invented in the 1700s (or Industry 1.0), there was a period of negative productivity growth as businesses invested in the new technology and workers learned how to operate it effectively. Even after they did learn how to use it, there were still accidents and inefficient operations due to a need for more understanding about how the technology worked. But by 1800, this adjustment period was over, and the steam engine was driving an era of unprecedented economic growth and prosperity.
The same pattern can be seen with other GPTs, such as electricity (Industry 2.0) and information technology (Industry 3.0). While some initial costs may be associated with adoption, these technologies eventually lead to periods of sustained economic growth. So far, every major GPT has had a positive impact on economies around the world.
It’s important to note that not all GPTs go through this phase of decreased productivity. In some cases, new GPTs are quickly adopted and implemented without negatively impacting productivity. It just depends on the circumstances surrounding the adoption of the new GPT. One example of a GPT that has had a major impact on economies worldwide is the Internet. The Internet has created entirely new industries and millions of jobs. It has also been a major driver of innovation, with companies like Amazon, Google and Facebook constantly pushing the envelope regarding what’s possible. General-purpose technologies truly have the power to change the world as we know it.
GPT in the Industry 4.0’s Era
In recent years, much talk has been about “Industry 4.0” and the technologies driving this fourth industrial revolution. Industry 4.0 technologies like big data, the Internet of Things (IoT), Blockchain, artificial intelligence (AI), and machine learning are all considered to be types of GPT and have the potential to revolutionize nearly every industry on the planet. And like previous GPTs, they are expected to impact society and the economy profoundly.
In Industry 4.0 GPT’s applications, use case by combined data collected by IoT and processed using AI to improve decision-making in inventory management and predictive maintenance areas.
Does GPT Matter for SMEs?
GPT is only important for large enterprises because they have the resources to invest in new technologies. However, this is only sometimes true, so while it’s true that larger enterprises may have an easier time investing in new technologies.
So, do GPTs matter for small and medium-sized businesses (SMEs)? Absolutely! SMEs are expected to be some of the biggest beneficiaries of Industry 4.0 technologies. That’s because these technologies can help SMEs automate tasks that would otherwise need to be performed by human workers. This not only saves companies money on labour costs, but it also frees up employees to focus on higher-value tasks.
SMEs are often more nimble than larger enterprises and can more easily adapt to technological changes. This means they can quickly adopt new GPTs as they become available and reap the benefits of increased productivity before their larger competitors catch up. Another reason is that SMEs are under pressure to do more with less – to compete with larger enterprises on a low playing field. To level the playing field, SMEs must use every tool, including GPTs.
There are many different types of GPTs available on the market today. The best way to determine which GPTs are right for SMEs is to consult an automation professional or system integrator who can assess your needs and make any recommendations.
Conclusion:
GPTs have been responsible for some of history’s most significant economic growth periods. They have also been crucial in helping societies adjust to changing conditions and prepare for future challenges. As we enter an age where artificial intelligence and other cutting-edge GPTs are becoming increasingly prevalent, we’ll likely see even more major economic shifts in the years to come.
The initial adoption of a new GPT within an economy may cause decreased productivity due to the time required to develop new infrastructure, learning costs, and adjustment costs associated with reallocating resources from old technologies to new ones. However, these effects are transitory and yield greater productivity as businesses adjust and adopt the latest technology. Ultimately, GPTs lead to increased productivity and economic growth around the world.
GPTs are an important part of Industry 4.0 applications and can provide significant benefits for both large enterprises and SMEs alike. So, to increase your productivity, adopt new GPTs as they become available and reap the benefits before your competitors catch up!
