The Technological Paradox: Essence, Empirical Basis, and Explanations

The article examines the phenomenon of the technological paradox, the essence of which lies in the existence of fundamental contradictions between, on the one hand, macroeconomic data, and, on the other hand, meso- and microeconomic data when assessing the technological level of different countries. This contradiction manifests itself most acutely when comparing the United States and China: on the one hand, GDP per capita registers a threefold superiority of America in technological development; on the other hand, ASPI data show that China ranks first in the world in nearly 90% of all critical technologies and confidently outpaces the United States. This contradiction is corroborated by other data and requires a systematic explanation. One such explanation has been proposed by E. Todd, which involves adjusting GDP per capita from the perspective of its real productive potential. However, the calculations performed showed that this approach can only partially explain the technological paradox, prompting the proposal of an alternative explanation based on taking into account the structural factor. According to this approach, China's economy consists of three sectors at different technological levels: in the first (advanced) sector, the average level of labor productivity is higher than that in the United States; in the second (high-tech) sector, it is equal; and in the third (low-tech) sector, it is lower. Such technological heterogeneity of China's economy, on the one hand, allows it to generate results better than those of the United States, while on the other hand, it accounts for its low macroeconomic indicators. This effect makes it possible to reconcile China's simultaneous lag and superiority relative to the United States.

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Publication Details

Journal
Issues of Economic Theory
Published
2026-11-11
DOI
https://doi.org/10.52342/2587-7666vte_2026_4_7_20
Primary Topic
Economic Growth and Productivity
Type
article
Field-Weighted Citation Impact
0.00
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article

The Technological Paradox: Essence, Empirical Basis, and Explanations

Evgeny V. Balatsky
Issues of Economic Theory
Economic Growth and Productivity
article

The Technological Paradox: Essence, Empirical Basis, and Explanations

Evgeny V. Balatsky
article en

Abstract

The article examines the phenomenon of the technological paradox, the essence of which lies in the existence of fundamental contradictions between, on the one hand, macroeconomic data, and, on the other hand, meso- and microeconomic data when assessing the technological level of different countries. This contradiction manifests itself most acutely when comparing the United States and China: on the one hand, GDP per capita registers a threefold superiority of America in technological development; on the other hand, ASPI data show that China ranks first in the world in nearly 90% of all critical technologies and confidently outpaces the United States. This contradiction is corroborated by other data and requires a systematic explanation. One such explanation has been proposed by E. Todd, which involves adjusting GDP per capita from the perspective of its real productive potential. However, the calculations performed showed that this approach can only partially explain the technological paradox, prompting the proposal of an alternative explanation based on taking into account the structural factor. According to this approach, China's economy consists of three sectors at different technological levels: in the first (advanced) sector, the average level of labor productivity is higher than that in the United States; in the second (high-tech) sector, it is equal; and in the third (low-tech) sector, it is lower. Such technological heterogeneity of China's economy, on the one hand, allows it to generate results better than those of the United States, while on the other hand, it accounts for its low macroeconomic indicators. This effect makes it possible to reconcile China's simultaneous lag and superiority relative to the United States.

Issues of Economic TheoryVol. 33(4)
Central Economics and Mathematics Institute (RU)
Economic Growth and Productivity
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