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The Determination of the Rate of Technical Progress

  • W. A. Eltis

Abstract

It is clear from almost all approaches to what determines an economy’s equilibrium rate of growth that the rate of technical progress will have a dominant influence upon it. The rate of technical progress will also be a major factor in the determination of an economy’s capital-output ratio, its rate of profit and its distribution of incomes. How the rate of technical progress is determined will therefore be a matter of the utmost importance.

Keywords

Labour Force Labour Productivity Annual Rate Capital Stock Serial Number 
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Notes

  1. 1.
    Cf. J. Conlisk, ‘A neoclassical growth model with endogenously positioned technical change frontier’, Economic Journal, vol. LXXIX (June 1969), where it is argued that research and development expenditure in an economy’s ‘productivity sector’ produces technical progress as an ‘output’.Google Scholar
  2. 2.
    See Edwin Mansfield, The Economics of Technological Change (Longmans, 1969) pp. 72-5.Google Scholar
  3. 1.
    Cf. R. F. Harrod, ‘Theory of imperfect competition revised’, in Economic Essays (Macmillan, 1952).Google Scholar
  4. 1.
    Cf. J. K. Galbraith, The New Industrial State (Hamish Hamilton, 1967).Google Scholar
  5. 1.
    Statistics on technical progress in the nineteenth century are not generally thought to be very meaningful. For the twentieth century, it has been estimated that the growth in total factor productivity in the U.S.A. was 1-8 per cent per annum from 1900 to 1929, 2.3 per cent from 1929 to 1948, and 2.8 per cent from 1948 to 1966. The ratio of research expenditure to GNP approximately trebled from 1930 to 1944, and it doubled between 1953 and 1966. W. Fellner, ‘Trends in the activities generating technical progress’, American Economic Review, vol. LX (Mar 1970).Google Scholar
  6. 1.
    Cf. William D. Nordhaus, Invention, Growth and Welfare (Cambridge, Mass.: MIT Press, 1969) p. 106: ‘The assumption that technical change is a function of the relative amount (of either the labour force or production) devoted to research is not satisfactory. Empirical studies … indicate that the absolute amount of resources devoted to research should be the determining variable. The correct formulation does not allow a steady state equilibrium.’Google Scholar
  7. 1.
    T. P. Wright, ‘Factors affecting the cost of airplanes’, Journal of the Aeronautical Sciences, (1936); and H. Asher, Cost-Quantity Relationships in the Airframe Industry, R-291 (Santa Monica, Calif.: RAND Corporation, 1956).Google Scholar
  8. 1.
    Cf. M. FG. Scott, ‘Supply and demand refurbished’, Oxford Economic Papers, vol. XIX (July 1967) p. 163.Google Scholar
  9. 1.
    See H. A. J. Green, ‘Growth models, capital and stability’, Economic Journal, vol. LXX (Mar 1960); and J. Black, ‘The technical progress function and the production function’, Economica, vol. XXIX (May 1962).Google Scholar

Copyright information

© W. A. Eltis 1973

Authors and Affiliations

  • W. A. Eltis
    • 1
  1. 1.Exeter CollegeOxfordUK

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