Technical Progress Function

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.

BREAKING DOWN '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. Efficiency

    A level of performance that describes a process that uses the ...
  2. Economic Efficiency

    A broad term that implies an economic state in which every resource ...
  3. Output Gap

    An economic measure of the difference between the actual output ...
  4. Progress Billings

    A series of invoices prepared at different stages in the process ...
  5. Allocational Efficiency

    A characteristic of an efficient market in which capital is allocated ...
  6. Productivity

    An economic measure of output per unit of input. Inputs include ...
Related Articles
  1. Economics

    Explaining Economic Efficiency

    Economic efficiency is achieved when every resource is optimally allocated to minimize waste and best serve each person in that economy.
  2. Taxes

    Explaining Progressive Tax

    A progressive tax is a levy in a tax system where the tax rate increases as the taxable base increases.
  3. Economics

    Explaining Efficiency

    Efficiency refers to the ability to make something with the fewest resources possible.
  4. Economics

    What is Productivity?

    Productivity is an economic term describing the relationship between outputs as compared to inputs needed to produce those outputs.
  5. Bonds & Fixed Income

    Yield Curve

    Learn more about how this curve is used to predict changes in economic output and growth.
  6. Economics

    How Demographics Drive The Economy

    Demographics can have a profound effect on the economy. An aging population coupled with a declining birthrate points to a decline in economic growth.
  7. Economics

    Is Infinite Economic Growth on a Finite Planet Possible?

    While the finite nature of Earth's resources limits the direction of economic growth, it does not mean that infinite economic growth is impossible.
  8. Active Trading

    Market Efficiency Basics

    Market efficiency theory states that a stock’s price will fully reflect all available and relevant information at any given time.
  9. Economics

    Understanding Production Efficiency

    Production efficiency is the point at which an economy cannot increase output of a good or service without lowering the production of another product.
  10. Personal Finance

    Does a Shorter Work Week Lead to Greater Productivity?

    While technology has significantly increased labor productivity, institutional changes, such as a shorter work week, could also be very productive.
RELATED FAQS
  1. How can I calculate funds from operation in Excel?

    Understand how the terms ''work in progress'' and ''work in process'' are used interchangeably to refer to items in the middle ... Read Answer >>
  2. How is work in progress (WIP) typically measured in accounting?

    Understand what work in progress is and why a company would have this on its financials. Learn how work in progress is typically ... Read Answer >>
  3. What are the pros and cons of a progressive tax policy and who benefits the most ...

    Find out who may be opposed to a progressive tax hierarchy. Learn the pros and cons of such a taxation policy and who it ... Read Answer >>
  4. Is progressive tax the same thing as marginal tax rate?

    Learn how a marginal tax rate is a form of a progressive tax rate. Learn the pros and cons of such a tax policy and who may ... Read Answer >>
  5. What's the difference between diminishing marginal returns and returns to scale?

    Understand the main differences between the law of diminishing marginal returns and the concept of returns to scale through ... Read Answer >>
  6. Are progressive taxes ever more unfair that flat taxes?

    Learn more about progressive taxes and flat taxes. Find out why progressive taxes may be unfair for many taxpayers and why ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center