The meaning of technology

Technological capital is intuitively easy to understand, as it is things like computers and advanced manufacturing processes. A working definition might be physical capital with a high level of education or knowledge required in use or maintenance. International technological transfers might be defined correspondingly as adoption of physical or intellectual capital from overseas which increase the technological capital in an economy.

The definitions work, but they have often not been used in the economic growth literature. It is quite common to define technology as total factor productivity - the output of the economy divided by the value of its inputs, particularly physical capital, educational capital, and labour. This definition means that technology could include many things which do not seem very technological, such as a stable political environment.

However, it does have the advantage that the interaction between education and total factor productivity can be investigated. If total factor productivity is heavily influenced by technology defined by my criteria - goods requiring a high educational content for use - then one would expect that there should be a high correlation between education and total factor productivity. Some writers have found that the relation exists, and I think that the hypothesis of a link was made at least as early as the 1960s.

A few other writers do use measures of technology transfer which could coincide with my definition, although they may not state the broad definition.