When we think about innovation and technological progress, we tend to focus on the dramatic changes: cars replacing horses and buggies, electric light bulbs replacing gaslights, computers replacing adding machines and typewriters. However, much more progress is incremental and almost invisible to most people, yet has huge effects over time. Consider, for example, the simple bar-code scanner.

Bar codes were first used commercially in 1974, when a 10-pack of Wrigleyʼs chewing gum was rung up with a scanner produced by the National Cash Register Corporation (now NCR Corp). Since then bar codes and their two-dimensional descendants — visual patterns that are meaningless to human eyes but are instantly recognizable by scanners and smartphones — have become ubiquitous, used to identify and route everything from shipping containers to airline passengers. 

The benefits from machine-readable labels are enormous, extending well beyond what consumers in the checkout line can see. For example, retailers use them to continuously track sales, telling them when to reorder merchandise and restock shelves, what to keep in their warehouses, how productive individual workers are, and more. Grocery retailing is a labor-intensive industry, and economists estimate that the adoption of bar-code technology reduced labor costs by as much as 40%. Ultimately, bar-code technology helped drive the computerization of the entire retail industry.....

QUESTIONS

1. Bar-code technology spurred a lot of investment in retailing. How did it alter the retailing production function? What would a similar amount of investment have accomplished without the new technology? 

2. The spread of bar codes was delayed in the United States because everyone was waiting for someone else to move. What policy could have been adopted to address the delays? Would it have been a good idea? 

3. Use the case to explain why international growth rates vary. 

4. Despite initial barriers, bar codes have spread globally. What does this imply about differences in economic growth across countries?