Investment-specific technological progress

<p>Investment-specific technological progress refers to progress that requires <a href="/facts/Investment/VrMookcv">investment</a> in new equipment and structures embodying the latest technology in order to realize its benefits. To model the influence of <a href="/facts/Technological_change/7djdPWQ4">technological change</a> upon production the influence of a technological change upon the specific inputs (i.e. <a href="/facts/Labour_(economics)/RRlxNx0u">labor</a> and <a href="/facts/Capital_(economics)/lLkzDdoB">capital</a>) of a <a href="/facts/Production_theory_basics/G5mF3WkI">production</a> model is assessed in terms of the resulting effect upon the <a href="/facts/Final_good/a4c3onQ8">final good</a> of the model (i.e. goods and services). 
</p><p>To realize the benefits of such technological change for production a <a href="/facts/Business/For1e8Nh">firm</a> must invest to attain the new technology as a component of production. For example, the advent of the <a href="/facts/Integrated_circuit/fjn6vg7C">microchip</a> (an important technological improvement in computers) will affect the production of <a href="/facts/Ford_Motor_Company/lY6Wcwty">Ford</a> cars only if Ford Motor Co.'s assembly plants invest in <a href="/facts/Computers/SQe1aK05">computers</a> with microchips (instead of computers with <a href="/facts/Punched_cards/44WsPulQ">punched cards</a>) and use them in the production of a product, i.e. <a href="/facts/Ford_Mustang/Jmt5Xflt">Mustangs</a>. Investment-specific technological progress requires investing in new production inputs which contain or embody the latest technology. Notice that the term investment can be general: not only must a firm buy the new technology to reap its benefits, but it also must invest in training its workers and <a href="/facts/Management/8KMV9yMM">managers</a> to be able to use this new technology.
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Investment-specific technological progress open-in-new

Investment-specific technological progress