TECHNOLOGICAL-PROGRESS - A PROPOSED MEASURE

The article suggests a direct measure of technological progress that c an be quantified with reasonable confidence on the basis of historical data. The proposed measure is the efficiency with which resources (ma inly energy sources) are converted into final services. It decomposes into two components, namely the thermodynamic efficiency of converting an energy source into mechanical work and the efficiency with which m echanical work is used to produce final services. The first part of th is can be estimated, by sector, with fair accuracy. The second part ca n only be estimated with reasonable accuracy in a few cases (such as t ransportation and illumination), but the results are sufficient to per mit some plausible extrapolation. The proposed measure is hopefully of interest in itself. But perhaps it is more important insofar as it su ggests a way to construct an economic production function that explici tly reflects technological change, rather than treating ''technical pr ogress'' as an unexplained residual. (C) 1998 Elsevier Science Inc.