New Techniques
Throughout the nineteenth and twentieth centuries, changes in the
techniques available for producing existing products have been dramatic;
this is called process innovation. Two examples where the product is
largely the same but the techniques for producing them have changed
dramatically are road building and electricity production. A century ago,
roads and railways were built by gangs of workers who used buckets,
shovels, and draft horses. Today, bulldozers, giant trucks, and other
specialized equipment have banished the workhorse completely from
construction sites and to a great extent have displaced the pick-and-
shovel worker. Before the Second World War, electricity was generated
either by burning fossil fuels or by harnessing the power of flowing water.
After the Second World War, many countries developed large-scale
nuclear generating capacity that displayed enormous economies of scale.
In recent years, however, the development of wind and solar power has
improved to the point where average production costs in even small wind
and solar “farms” compare favourably with those in much larger nuclear,
hydro, or fossil fuel–burning generating stations. The product—electricity
—is absolutely unchanged, but the techniques of production have
changed markedly over the past several decades.
Improved Inputs
Improvements in material inputs are constantly occurring. For example,
the type and quality of metals have changed. Steel has replaced iron, and