Production Sets, Technological Knowledge, and R & D: Fragile and Overworked Constructs for Analysis of Productivity Growth?

Three broad theoretical constructs almost universally applied in analyses of productivity growth (1) production sets and their efficiency frontiers (production functions) which sharply delineate the set of input-output possibilities known and available to firms at any time; (2) technological knowledge, which at any time determines production functions and the advance of which shifts production functions; and (3) research and development, specialized activities that advance technological knowledge. Economists tend to consider these broad constructs as solidly grounded and universally applicable. In contrast, the author argues that these are fragile and overworked, and actually misleading for thinking about productivity growth in some economic sectors. More than that, the presumption that they are applicable across all economic sectors obscures exactly those differences which may be the most important ones in explaining cross-sectoral variations in productivity growth rates.