A Note on the Technological Progress in Selected Stus
20 Pages Posted: 29 Jan 2001
Date Written: January 16, 2001
The prime objective of this paper is to empirically investigate the nature of technological progress in selected STUs. To examine this issue, a translog cost function is estimated jointly with factor share equations subject to required coefficient restrictions by using the method of 'Zellner's iterative' technique. We found that most of the STUs exhibit productivity growth over time, and the cost savings occurring from technological change seem to be significant. The technological change exhibited by the STUs indicates both productivity growth as well as changes in the structure of technology. It appears that the benefit of technological progress have predominantly accrued to large size STUs. Although big size STUs experience greater technological progress but it does not necessarily mean that they are relatively more cost-effective in comparison to their smaller counterparts. When average cost curve is U-shaped, as is in this case, the level of production associated with minimum average cost will be optimum even though that may not be associated with highest possible technological progress.
JEL Classification: L32, L92, O30, R40
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