The "technological progress" of the Second Age occurred in Eregion and Numenor. Both realms were destroyed. The legacy of Eregion's technology was found in the Rings of Power. The legacy of Numenor's technology was to be found in the massive architecture of places like Minas Anor (the outer wall, at least) and Orthanc (the tower, at least).

The Elves' population declined due to wars and departures over Sea, so the pool of creative talent which remained behind dwindled. Most of Numenor's people and records were destroyed in its Downfall, so a great deal of "technological" knowledge had been lost by the end of the Second Age. The Dunedain of Arnor and Gondor also suffered tremendous losses in the War of the Last Alliance, so again more knowledge and skill were lost. In the Third Age Gondor prospered as a military and political power but it didn't rediscover the lost lore of the Second Age (or it rediscovered only a small part of it).

The Dwarves represent a technologically advanced people in the Third Age, but they don't seem to have been sharing their secrets then, and by the end of the age they, too, were in considerable decline due to wars and disasters.

The Middle-earth of THE LORD OF THE RINGS is an ancient time when knowledge was fading and younger tribes of Men were becoming more widespread. Gunpowder and machinery DO exist, but they are utilized by Saruman and Sauron against the West, and the secrets of their making either died with Saruman or Sauron or else Aragorn and his allies wanted no part of them. So eventually the world declined into a blissful ignorance from which Men had to slowly rise again.

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