Impacts of Technology on Economic Growth: With Difference Between Tourism Countries and Industry Countries Aspect Based on Extended Solow Growth Model

The effects of technology on economic growth and development have been an area that many economists have focused on, especially since the post-World War II period. Technology itself has been taken as an external factor by Solow (1957) for economic growth whereby later is accepted as an internal factor by Romer (1986) and Lucas (1988). This study aims to analyze the differing technological impact on economic growth between countries with a high share of tourism in their gross domestic product and countries with a high share of the industry by setting a model based on Solow Growth Model. Another aim of the study is to determine the direction of the net effect of technology for the determined country groups. In such a way that, by increasing productivity, technology is the most important factor in solving the world's scarce resources problem. However, it also causes social and economic problems by creating negative externalities such as environmental pollution and global warming. The primary motivation of this paper is to fulfill the area that can not be met in the literature about the specific difference in technology's effect on economic growth between industry and tourism countries. In addition, to set the impact differences and clarify the net effect of technology, two different country groups have been defined consisting of 30 tourism countries and 30 industrialized countries. The same growth model was imposed in which capital, labor, tourism income, trade openness, and middle and high-technology export level as independent variables for both groups. GMM-Generalized Method of Moment estimator was applied, and it is surprisingly concluded that technology has a negative impact on both country groups' economic growth. This paper fulfills the area that can not be met in the literature about the specific difference in technology's effect on economic growth between industry and tourism countries.