The technological theory of production and a method of decomposition of the rate of GDP in terms of labour and capital services

It is assumed that performance of production system can be described with the three variables: amount of production equipment -- capital stock $K$ and 'consumption' of labour L and capital services S. It is shown that the production function can be specified as the known Cobb- Douglas production function, in which capital services S stands instead of capital stock K, while the state of the production system itself is specified by the technological index 'alpha'. Capital stock plays the role of the means through which the labour resource is substituted by capital services. A method for estimating of capital services and the technological index due to known time series of the output Y, capital stock K and labour L is developed which allows one to separate contributions from production factors and structural change. Empirical evidence for the US economy is used to estimate the validity of the proposed theory.