This study develops a conceptual framework for analysing the ways in which changes in the economic environment modify factor productivity. It focuses on the technology actually used in production — implemented technology — rather than the generation of technology. Implementation reflects the pattern of incentives and constraints deriving from the underlying economic conditions with which producers are faced in making technology choices.

The study provides an original, formal theoretical underpinning to the popular but essentially unsubstantiated proposition that productivity and the rate of growth of productivity depend on the policy framework ...