A New Index for Identifying Technology Development in OECD Countries

Abstract

In this paper, we suggested a new technique for extracting a technology index time series and calculated the technology index for 26 OECD countries for the years 1990-2011. Assuming that production function is Cobb-Douglas and with constant return to scale and that the labor parameter is equal to the labor share out of the total production, we extracted the technology parameter for each year and for each country. According to our findings, the largest advance in technology occurred in Estonia, Slovenia, Poland, and Ireland while the smallest advance was in Italy, Portugal, Mexico and Japan. A possible explanation for these differences is foreign R&D spillovers.