Technical progress (economics)

Technical progress (or technological progress) is an economic measure of innovation.

Technical progress can be classified into two parts:

In the real world, many innovations do not require replacing the entire or some part of the equipment. It can be improved for better use depending upon the change required. Hence technological progress, embodied or disembodied, is matter of degree.

The technical progress function developed by Nicholas Kaldor measures technical progress as the rate of growth of labour productivity. It is described by the following statements:

Technology has an important relationship with human capital. Same technology can be applied in two different firms, but output varies with respect to the labour force of that firm. Adaption to new technology is directly proportional to pace of economic growth of the country. Hence labour should be experienced with the technology. Education also plays an important role as it helps in accumulating human capital which in turn helps technology diffusion. Education also helps a person get acquainted with technology efficiently and rapidly.

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