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Technological change plays a critical role in economic growth. Prevailing approaches to estimation of total technological change are associated with total factor productivity (TFP) based on a Cobb-Douglas (CD) production function. To estimate resource-specific technological change, previous studies typically assume an alternative specific functional form other than a CD function such as a Constant Elasticity of Substitution (CES) function. In this article, we argue that under certain conditions, a resource-specific technological change can be estimated from observed resource intensity/productivity data over time, irrespective of which functional form is adopted. We also illustrate that if the estimated technological change is applied to a CD production function, the estimated resource elasticities can differ considerably from that estimated by the prevailing TFP approach. In our case of a panel data for 40 regions 1995–2009, our approach shows that a CD function is plausible across regions compared to the TFP approach.
More details
- DOI: 10.1016/j.techfore.2018.08.006
- Year: 2019
- Journal: Technology Forecasting and Social Change
- Language: English
- Volume: 138
- Page: 29 - 33
- Issn: 0040-1625