TESTING OKISHIO’S CRITERION OF TECHNICAL CHOICE

Okishio’s theorem plays an important role in modern discussions of Marx’s argument on the long-run tendency for the rate of profit to fall. Even though there is substantial literature dealing with Okishio’s theorem, there has been little discussion of Okishio’s theorem from an empirical perspective. This paper makes an attempt to empirically test Okishio’s criterion of technical choice, which is an important assumption of Okishio’s theorem. By using the World Penn Tables data on selected OECD countries, I will consider how well Okishio’s criterion of technical choice predicts the evolution of actual capitalist economies.