Directed technological change, factor adjustment, and GDP: Two decompositions with OECD evidence

We propose a growth-accounting approach based on a time-varying Constant Elasticity of Substitution (CES) production function that decomposes the total technological effect on GDP into neutral and non-neutral components, separating pure productivity from effects induced by factor-quantity adjustments. Applied to a balanced panel of 32 OECD countries (1994–2019), the method shows that most of the technological impact on GDP arises from non-neutral components operating mainly through adjustments in factor composition and quantities, while the direct productivity contribution is often weak or negative.