Abstract A “top-down” approach to measuring technological change at the industry level is proposed. It begins with a materials-process-product view of the economy as a whole. Each sector is identified in terms of its specific role in terms of extracting, refining, converting, synthesizing or finishing fuels, materials, and/or material products. (Final services, in turn, are mainly delivered by material products. Hence the role of information processing sectors can also be characterized in terms of this paradigm). For each stage of processing it is possible to construct an objective function for the corresponding industry of the form cost(in $)/output (in physical units), where the object of the sector is to minimize this function. Usual output measures (units or weight of product) are often inadequate for the purpose, since they do not reflect changes over time in the quality or performance of the product. The problem, then, is to characterize the output of each sector in terms of desired technological performance. A set of generalized sectoral output measures is proposed (in Table 1) and some examples are discussed in detail.
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