Solow?'s « residual » [1957] is generally used as a measure of productivity growth. This paper suggests a critical view of the standard method, indicates five reasons for under-evaluation of productivity gains and makes some proposals of improvement.

Optimum growth, endogeneous growth theories, real business cycles models find strong support, and partly its very origin on maximum principle which seems specially suited for economic analysis. The comparison with Ramsey model emphasizes how introduction of Maximum Principle did help to clarify...