A Model to Measure Technology

Abstract

The new operational concepts of knowledge, technology, and capital are developed here. Building on the difference between a concept and an operational concept, epistemological analyses are performed for the concepts of knowledge, technology, and capital, deconstructing their semantic use along the centuries, especially in present times, and reconstructing them in such a way they could be identified as independent production factors. This is mainly described in annex and is summarized in this chapter, defining objectively each of the new operational concepts as well as drawing the border lines between them. Then, it is described a production process, as a value-adding process, where the three new production factors—knowledge, technology, and capital—contribute linearly with the value of their use in the production process. Concurrently, the knowledge index, the technology index and the capital index are defined, expressing their relative contribution to gross value added. Next, using the concept of gross value added as defined by international standards, the corresponding accounting terms are identified with either the use of knowledge, technology, or capital. This approach allows building an algorithm to measure the value contributions from the uses of the three factors, algorithm that can be applied to every production process, being a single firm, an economic sector, or a whole economy. Most of this chapter follow Fernandes [7]. This is the KTC model in its static form. It is also presented in a dynamic form, which allows a clear understanding of what are the main conditions for economic growth.