What do you understand by technical progress? What is the relationship between technical progress and growth of total factor productivity? Discuss the various conceptions of neutral technical progress as put forward by Hicks, Harrod and Solow.

Technological progress refers to the discovery of new and improved methods of producing goods. Changes in technology lead to an increase in productivity of labor, capital, and other factors of production. Technology refers to the process through which inputs are transformed into outputs. 

Technical progress manifests itself in the change in production function. So a simple measure of the technical progress would be the comparison of the position of production function at two points of time. The technological change operates upon the production function through improvements of various sorts such as superior equipment, an improved material, and superior organisational efficiency. Also, the technological progress may express itself in making available new products. The availability of a new product in many cases could be construed as a change in the production function as it can be regarded equivalent to a more efficient way of meeting an old want.

The process of technological progress is inseparably linked with the process of capital formation. In fact, both go hand in hand. Technological progress is virtually impossible without prior capital formation. It is because the introduction of superior or more efficient techniques requires the building up of new capital equipment which incorporates new technology. In other words, new and superior technology can contribute to national product and its growth if it is first embodied in the new capital equipment.

Total factor productivity (TFP) is a measure of productivity calculated by dividing economy-wide total production by the weighted average of inputs i.e. labor and capital. It represents growth in real output which is in excess of the growth in inputs such as labor and capital.

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