No, that would do the opposite of what you're suggesting and slow technological advancement to a standstill. Necessity and competition is what breeds technological advancement, not people puttering about working on whatever they want to work on.
The Federation is a wacky 60's concept that would completely and utterly fail in real life. If the writers forgot this notion after TNG's second season, then thank god for the writers getting some sense knocked into them.
Incorrect.
Your notion stems from a monetary system with a specific set of values and myths that have been perpetuated for a long time that science itself doesn't agree with.
Competition and greed are not part of human nature (that's a myth) - they are learned behavior and a byproduct of a system that doesn't encourage creativity or critical thinking.
DaVinci, Tesla and Einstein (to name a few) did not make their inventions/discoveries due to the incentive of money - and a lot of people today volunteer their free time and ideas without compensation or competition of any kind.
And money if anything grinds certain technologies down to a halt (as is evident with renewable energy sources, some of which like geothermal energy could have been used to replace coal since 1911, but there was 0 incentive to do so, much like with orbital solar panels that could transfer power via wireless beams to us since the 1980's, then of course, there's wind power, recycling technologies that were available since the early 20th century, etc.).
'Cost effectiveness' does NOT equal 'the best we can do in the most efficient way' - instead, it means to invest the smallest amount of money possible to gain maximum profits with an intent to stay competitive with other companies.
Today's products are designed with planned obsolescence in mind.
They are NOT made to last, and equipment which is subject to fastest evolution such as computers are mostly NOT made to be upgrade-able in the long run before you have to replace something - oh and lets not forget the amount of electronic waste alone that piled up on the planet.
And who can forget about milking consumers for their every penny using old technologies that could have been phased out since the mid 90-ies (man-made diamonds were made in 1996 and were cheap/easy to make from a monetary point of view - and computer chips could have been made since then - but patent issues delayed it for years - never mind the premise that computer chips made from diamond would be roughly 40x more powerful/faster/efficient using less power than silicon based chips. Oh and Graphene was invented in 2004 - 2 or 3x better in every respect than diamond, and could have been used in electronic production at least in hybrid form since 2006 - even scientists admit that a multi-billion dollar silicon industry would be the LAST to adapt diamond, let alone Graphene as base materials.
First you will likely see silicon/diamond hybrid... followed by maybe partial use of graphene - at least until they start revising the heck out of those technologies and releasing minor improvements every 12-24 months or so to keep continuous profits flowing.
Current monetary and consumer system promotes wastefulness with 0 sustainability in mind.
Anyone who is able to think in a critical fashion would be able to see that.
As for technological evolution, get rid of money and people can be reeducated to be problem-solvers that would put in their ideas to benefit mankind - and you will effectively see explosions in terms of technological development.
I have to laugh at the defendants of the monetary system because they perpetuate outdated myths and the system that simply don't hold up to scrutiny.