Innovative Growth : A New Way of Measuring Technological Progress

This paper suggests a new way of measuring technological progress based on a Schumpeterian conceptualization of technological change, incorporating demand (diffusion) and supply (innovation) factors in a single model. Thus, the new measure reflects the value added created over the whole process of technological change while avoiding the aggregation paradox, and being based on firm decision to invest in capital goods, provides an endogenous mechanism for technological change