The importance of technological advancement depends on the turn rate. Going forward one year at a time, nothing isn't going to change that much. But if the timestep is 5 or 10 years, then technological advancement would be relevant factor. Available technology can really warp results, and because the IH rules do not yet have a good system to take it into account, technological advancement can severily unbalance the game.
Innovative research is very hard.
Thus it usually requires considerable amounts of effort, time and money. A fifth aspect balancing the game is that assimilating new technology and techniques is a lot easier than inventing it in the first place. Leading edge isn't necessarily in wide use. Craft gives the technology in use in the society. This is typically easier for smaller societies.