Measurement Of Total Factor Input, Technical Change And Output By Industry In The Federal Republic Of Germany 1958–1968

This paper deals with some results of an extended investigation which was carried out by the German Institute of Economic Research, Berlin, and the Ifo‐Institute, Munich, and financed by the Stiftung Volkswagenwerk. For 29 sectors of manufacturing Cobb‐Douglas production functions have been calculated, based on quarterly figures 1958–1968 of value added, input of hours worked, input of utilized capital stock (net of scrappage), and of potential value added, potential labor input and total capital stock. The income distribution is used as production elasticities. For each of the 29 sectors 12 time series of quarterly indices of total factor input and technical change have been computed, using utilized data (variation 1‐6) and capacity data (variation 7‐12). Two different time series of α are used, taking quarterly interpolated data (variation 1, 3, 5, 7, 9, 11) and the geometric mean 1958–1968 (variation 2, 4, 6, 8, 10, 12). Moreover three different parameters of homogeneity are introduced, taking r= 1 (variation 1, 2, 7, 8), r= 1.1 (variation 3, 4, 9, 10) and r= 1.25 (variation 5, 6, 11, 12). Seven of the 29 sectors show a very high sensitivity of the rate of technical change due to the assumed r, six sectors a rather high sensitivity. Ten of the 29 sectors show a rather small sensitivity of technical change due to the assumed r, six sectors a very small or even negative sensitivity, i.e. an increasing r creates an increasing technical change. These results can be explained by taking account of the fact that total factor input in many branches increased very slowly or even decreased (labor input alone decreased in nearly all branches). A hierarchy of technical change has been calculated; this hierarchy is difficult to explain, because fast growing industries as well as industries with a small or a negative growth rate of output rank in both the leading and the last group of technical change. Very high rates of output result in high rates of technical change (chemicals, mineral oil refining, plastics manufactures), but some industries with a rather small growth of output (shipbuilding, fine ceramics, steel drawing, and cold rolling mills) show a high rate of technical change too.