Measuring Embodies Technological Change in Indonesian Textiles: The Core-Machinery Approach

This article focuses on the measurement of embodied technological change. It develops the core-machinery approach to capital measurement, which is based on an engineering perspective on technological change. Using technical characteristics of different types of machinery, technical progress in the capital stock can be decomposed into incremental innovation in existing machinery and radical shifts to new technologies. The usefulness of this approach is illustrated by an analysis of embodied technological change in the Indonesian spinning and weaving industries. The core-machinery measure is compared with more traditional measures of the capital stock which are based on price information. Strengths, weaknesses and relevance of the new measure are discussed.