Technical Progress Function

AAA

DEFINITION of 'Technical Progress Function'

An economic relation which seeks to explain changes in the level of economic output in terms of the level of technical progress. Rather than looking at economic growth as a form of efficiently allocating inputs, the technical progress function explains economic growth in terms of investment in technological progress.

INVESTOPEDIA EXPLAINS 'Technical Progress Function'

The production function assumes that, given a preset level of technical progress, output is explained by the level of efficiency by which labor and capital are allocated to production. A technical progress function looks at this production the other way around. Given that inputs are allocated most efficiently, then the technical progress function assets that output is dependent on the level of technical progress. Thus, the greater the level of investment in technical progress over time, the greater the amount of output in the economy.

RELATED TERMS
  1. Per Capita GDP

    A measure of the total output of a country that takes the gross ...
  2. Productivity

    An economic measure of output per unit of input. Inputs include ...
  3. Output Gap

    An economic measure of the difference between the actual output ...
  4. Incremental Capital Output Ratio ...

    A metric that assesses the marginal amount of investment capital ...
  5. Capacity

    The maximum level of output of goods and/or services that a given ...
  6. Capital Loss Coverage Ratio

    The difference between an asset’s book value and the amount received ...
Related Articles
  1. How Influential Economists Changed Our ...
    Fundamental Analysis

    How Influential Economists Changed Our ...

  2. Economic Indicators That Do-It-Yourself ...
    Investing Basics

    Economic Indicators That Do-It-Yourself ...

  3. Explaining The World Through Macroeconomic ...
    Options & Futures

    Explaining The World Through Macroeconomic ...

  4. Vital Link: Manufacturing And Economic ...
    Fundamental Analysis

    Vital Link: Manufacturing And Economic ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center