One of the most researched subjects in economics, we believe, is “technical progress”—TP, which played a basic role in economic growth models, in 1928, and especially between 1939 and 1967, starting with Ramsey’s article on “optimal growth” in Economic Journal (Ramsey, 1928).

Is, however, technical progress—TP a product of…business magic? Because, how one company, using technical progress, can achieve a higher production with unchanged quantities of Capital and Labor? Should we accept the idea that TP is something falling from Heaven, like a manna? Or is something man-made? This type of technical progress is called disembodied.

Certain great economists, namely Hicks, Harrod and Solow embarked in determining the so-called neutral TP (Table 1). Neutral technical progress is defined as the one, which in its initial effects, leaves unchanged the ratio of marginal product of Capital over that of Labor. Solow found out that about 80% of the growth in USA output per worker was due to technical progress. Solow

Source: author.

eventually allowed in his models—as we did—the capital embodied in machinery to have different ages (vintages). Important was that the more recent vintages had more technical progress. Eventually economists—as we did—found that capital is more important for growth.

Hicks (1963) compared points in the growth process, during which the ratio of the marginal product of Capital and Labor is constant. Hick’s model assumes, in 2 cases, labor and capital savings. Solow’s neutral technical progress, allows capital to increase. Harrod (1948) defined neutral advances those that leave the distribution of the total national product between labor and capital unchanged (at a constant rate of interest).

In shipping, shipbuilding has to achieve less labor quantity on board and inevitably more capital quantity. If both can be reduced, it would be perfect, but by reducing the quantity of capital, we do not want to part from scale economies! In shipping, the Ct/Lt and Lt/Qt ratios are apparently constant… because the size of the vessel (productive capacity-quantity of capital) is fixed and the number of crew is theoretically also fixed, after ship’s construction. Production, however, is not fixed, depending mainly: on demand, on distance involved, and on vessel’s speed!

We have to say from the start: Speed in shipping, is an important factor, because it transfers ship’s production from origin to destination, adding utility to cargo, or in other words, speed performs the delivery stage of the cargo transported by sea. In addition, speed is a coefficient demonstrating also prevailing technology! The unfortunate fact is that higher speed needs more fuel, and fuel has become an expensive commodity, since end-1973, with the exception of the Pandemic period, 2019-2022!

Cobb and Douglas (1928) were not preoccupied so much with “technical progress”, we believe. Their main concern was, using a production function P = b C 1 − α L α (1), to prove the existence of constant returns to scale, where b indicates technology, C, the Capital quantity, L, the labor quantity and P, the production.

They wanted primarily to prove, using data, that α + ( 1 − α ) = 1 (2) (Douglas, 1934). The implication of (2) is great for distribution theory. If (2) holds, then each factor of production gets the value of its marginal product (Henderson & Quandt, 1958: p. 64)¹. Accordingly, the total value of production is “given” to these two factors, and there is no monopoly profit²! The above is also known as “Euler’s theorem³ (Chiang & Wainwright, 2005: p. 387).

Douglas (1976) re-visited “the 1928 Cobb-Douglas production function”, mentioning its history, its testing and giving certain new empirical values. The Cobb & Douglas (1928) found⁴ α = 0.6, and till 1938 = 0.65. Further, they estimated the results for fixed capital and physical production. In 1937, function (1) changed to: P = b L k C j (9). Again, k found 0.65 and j = 0.33, using time series. Then the Cobb-Douglas research used the cross-section method, and applied it to individual industries (1904-1919, on discrete years), k found to vary from 0.65 to 0.66, and j from 0.31 to 0.32, over 1,450 observations.

Research resumed in 1956-1968, (the years were not continuous), over 160 industries and 1123 observations, and k found within 0.54 to 0.61. The two coefficients together were equal to 1 only in 1967. We have but to admire Cobb and Douglas, and especially Douglas, for his persistence in research for proving the constant economies of scale for a period of over 50 years!

As argued by certain economists (Hahn & Matthews, 1964: p. 379) technical progress is embodied in new machinery, and bear the technology of their date of construction or machines have a birth date or vintage (Goulielmos, 2021a). The new machinery consists a separate family with own production function! The manna, in the form of technical progress, falls only together with new machines. This is called “new approach” (and it had to be distinguished from the “orthodox” one).

One may ask: how a capital equipment, like a vessel, of unchanged size, and the same quantity of crew, upon delivery, can produce more? The answer is mainly by a newly built larger ship, with an increased speed, installing a more powerful main engine, due to technical progress…

In shipping, finance, i.e., the monetary capital is the one, which is transformed into fixed capital, which is a necessary, and also a dominant condition to make business, and thus the shipowner has the right to get lion’s share, or 50% of the annual cost, as he/she is the one to find a loan, either from commercial banks or from Stock exchanges.

Alderton (1999) argued that between 1950 and 1970, a typical dry cargo vessel, run between Europe and Australia, increased her size from 13,066 dwt to 15,473 (18.4%), her speed from 13 knots to 15 (15.4%) and… her daily consumption from 20 to 24 tons, but her voyage time reduced from 217 days to 213…

This paper has 4 main aims: 1) To estimate the coefficient b in the Cobb-Douglas production function: P = b C 1 − α L α (where b, 1−α and α are constants > 0); 2) to provide a historical account of the technological progress in shipping, after 1945; 3) to determine the production of the: a) vessel, b) shipping company and c) maritime industry, relating it to its technical progress, and 4) to estimate the physical value of shipping technical progress, but also the $-value of it. This last one makes more sense for managers and is a unique contribution of this work.

The paper is made up by parts, after literature review and methodology. Part I deals with the history of the technical progress in shipping, 1945-2021; Part II deals with determining the framework of production in shipping industry; Part III deals with the production of tankers, 1963-2005, and Part IV deals with estimating technical progress in shipping in physical and monetary terms. Finally, we conclude.

Equation⁵ (1) will be used generalized, i.e., putting 1 − α = β (10). Also, b = A t (11). So, Equation (1) now becomes: P t = A t C t β L t α (12), where P_t is current production, A_t is a coefficient, which may increase current production due to changes in factors, other than Capital quantity, C_t, and Labor quantity, L_t, i.e., due to technical progress.

The above equation allows also to find-out all 3 cases of returns to scale: constant, increasing or decreasing. If f ( λ C , λ L ) = λ n f ( C , L ) (13) and if n> 1, there are increasing returns to scale (Jacques, 2018: p. 168), meaning that by increasing capital and labor by λ, production increases by λ n > 1 . Of exclusive importance for this paper will be coefficient A_t, indicating the state of technical progress in production, at time t, showing the efficiency derived from technology!

This can be shown: let C t + 1 = C t = 1 (14) and L t + 1 = L t = 1 (15), meaning constant quantities of Capital and Labor in production, then by Replacing (1) becomes P t + 1 = P t ∗ b ∗ 1 ∗ 1 (16). This further means that by keeping C_t and L_t constant, we can increase production by b (=A_t)! A miracle? If managers knew this miracle, they would appreciate more the role of TP!

What type of technical progress shipowners wish? TP in shipping is the one bringing inventions that make ship’s production faster with bigger ships! We put this in two words: larger and faster! Worth-noting is that the contribution of Capital to production is dominant, in both, quantity and value, as mentioned. The complementary contribution of the Labor quantity, is comparatively smaller, as labor cost does not exceed 10% - 15% of the total annual cost of the vessel.

The vessel produces only 95% of her dwt, if she is fully loaded. But even so, the vessel does not produce always, as shown in Graph 3, because there is: the “ship’s time lost in off-hire operations”! We believe that the most efficient shipping manager is the one managing the time of ships in a rather perfect way! But do managers/Captains pay the attention that time deserves in ship operations? We doubt.

The ship’s carrying-productive capacity is determined also by the weight of bunkers, water, stores, crew, etc., which restrict³⁰ her 100% carrying capacity by

about 5% on dwt on average… Stopford (2009: p. 155), presented a number of ship’s activities, which provide zero production. We added to his list a few factors missed by him (Graph 3).

As shown, there are 12 causes that prevent a vessel to produce fully! An efficient management has to eliminate this time. This is a serious waste of resources both for the company, but also for the economy.

Stopford (2009: p. 155) calculated the time for 4 of the above factors (namely: incidents, repairs, laid-up & storage), for a VLCC, in 1991, and found it equal to 21% or 73.5 days p.a. (on a 350-days year)! But, taking into account the loading/unloading and ballast time, the productive time of a VLCC is restricted to 140 days p.a. out of 350 (only 40%)! We understand that a VLCC is difficult to find a return cargo, but these figures are terrifying for any efficient management.

The production of a vessel is determined by the distance she has to cross and of course by the speed applied by her Captain³¹. Distances cannot be influenced by shipowners³². The actual production of a vessel per unit period, will be affected also by the time required to cross canals (Suez; Panama; etc.). Many exogenous variables act in shipping, which have to be controlled…

Moreover, the port time affects also the present, but also the future ship production! The port time depends on the technical progress adopted by ports. This is true for gearless ships, i.e., those loaded/unloaded by port means. Port congestion is rather rare today, unlike 1975³³, and Canals’ blockades are also sporadic and we will ignore them, though we had an incident in March-July 2021 concerning Suez Canal with the giant containership “Ever Given” to block Canal’s traffic for 3 months! An interesting question is who is going to pay Canal’s forgone transit fees?

Vessel’s speed, however, remains the key-factor for ship’s production for 3 main reasons (Graph 4). Managers have to decide about ship’s speed³⁴ after a careful study.

It is worth noting that shipping industry re-introduced time in economics (Goulielmos, 2018). One knot (1855.2 m) of additional speed makes a voyage faster by 2.78 days for a tanker of 225,000 dwt (Goulielmos, 2021b) for a 15,000 sea miles round trip. This time-saving per voyage, for one-year, amounts to 83.4 days, for 30 voyages per year, providing a serious additional production and revenue!

However, the port time increases also by 120 days (30 voyages × 4 extra days) due to the higher quantity of crude oil to be loaded/unloaded! Apparently, tankers failed to increase the power of their loading pumps! So, benefits from a

higher size and an increased speed, can be cancelled by a longer port time!

Given that the cost of transport is paid by consumers, Governments had to push their ports towards additional technical innovation in reducing the time spent by ships across their production line, including receiving and discharging cargo and oil!

This paper has contributed by underlining this important target, we believe! The importance of time in shipping is further shown in Graph 5.

As shown, time is a very important technical, as well economic, factor in shipping business, which has not received the attention it deserved… But “latter is better than never”. Ports should not hide under their carpet or behind their state or municipal nature, providing to them a monopoly³⁵, but they have to adopt technical progress in advance of ships that my call… Otherwise the technical progress embodied in ships is done in vain… as we showed!

Idle productive capacity is another waste of resources in shipping. Figure 5 indicates the idle capacity, that crude oil tankers could put to production, for the recent 43 years, if demand supported them, and supply was more rational.

The above bad situation continued and after 1979, with the exception of 1980, and in 1981-1987. The sacrifice involved amounted in 1963 to 1.7 m dwt, but increased after 12 years, to 27.9 m dwt (1975), and increased more thereafter, between 1976 and 1979. In a tanker crisis, tankers are used for storage. They are also used to carry grain, after be cleaned. Unfortunately, tankers become also laid-up, when demand falls, like in 1975. In 1983 this idle capacity approached 70 m dwt!

As shown, the tanker sector was depressed in 1975, when oil seaborne trade

for the first time fell. This depression lasted till 1988 (12 years), while in 1980, it had a retreat. The relationship between demand for tankers and supply for them is shown in Figure 6.

As shown, the tanker demand had a cyclical behavior with a low in 1985 (blue line), while its decadence started in 1979. A part of the active tanker fleet (red line) served oil trade. The fleet responded to a higher trade between 1970 and 1980.

More important of all is Figure 7, dealing with the tanker fleet, showing its productivity and Capital’s marginal product! Unbelievable!

Capital’s marginal product—MP_c—can be defined as: the increase in capital quantity by 1 ton (dwt), and the increase in tankers’ production. This was 8.95 tons (1965 top) of cargo carried, assuming a constant crew quantity. This MP_c fell in 1967 to 8.54 tons, and to about 7, in 1997-2004. One may ask here: if technical progress increased tanker production, why fleet’s productivity fell…?

Stopford informed us (p. 243) that ship’s productivity depends on the: 1) average operating speed (per hour; and over 24 hours); 2) loaded days at sea p.a., and 3) dwt % utilization.

The crisis in tankers, 1979-1987, reduced the loaded days at sea, and the % utilization of ships. It is important to mention here that the role of demand, in the diffusion of technical progress, which comes from new buildings, is a key-factor. Thus, shipping depressions, discourage the order of new ships and thus the coming of technical progress, if it exists in shipbuilding. We wrote elsewhere that a research and development department is quite necessary in shipping companies, but we see it nowhere!

Ship productivity fell further from 6.11 to 5.95 tons (1979-1987). Technical progress pushed-productivity -up slightly between 1988 (5.93) and 1991 (6.06), where a heavy ordering of 55 m dwt took place; also, in 1995, the shipbuilding output over doubled from 15 m to 33 m dwt, proving our argument.

In ship’s production distances, however, cannot be ignored (Figure 8). Above (in Figure 7), we calculated productivity free from the impact of distances.

As shown, distances increased in 1967, due to 2^nd Suez Canal closure (in May), for 8 years (till June 1975)! This had as a result bigger ships to be built, as distances increased by 2543 sea miles between 1966 and 1977. Thus, the major technological… invention, which took place, was to face the increase in distances by a subsequent increase in sizes of ships, and their speed! The importance of distances made us to present them twice.

Important for shipping is the cost of the raw material that is used to build ships, i.e., the steel. Shipping depends on so many other industries that they have to adopt technical progress too. The steel industry also passed through a series of technical developments (Besanko et al., 2013: p. 51). The steel industry initially produced high-volume products, suitable also for shipbuilding, where in early 1950s the lighter³⁶ steel products emerged.

It has been used the so-called “basic oxygen furnace” (1950), the continuous

casting process (1960s) and the scrap metal processing, using the “electric arc furnace”. In 1970 the scrap steel (due to discarded cars) introduced, followed by “mini-mills” (small producers) which converted scrap metal into finished steel products. In 1988, 93% of all Japanese firms adopted the “continuous casting process”. Modern societies produce millions of discarded cars, not taking into account useless ships. We are not sure if new material will be used in the construction of ships, but if this is lighter, cheaper and stronger, it will be of a technical advance.

Delivery of newly-built ships is the agents of technical progress, and as shown (Figure 9) in 1967, 1971 and 1977, this occurred. But deliveries did not exceed the 10% of existing fleet. Orders, at the same period, reached 23% maximum of the existing fleet, in 1957 (20.5%), 1970-1971 (23%) and 1975 (20.5%). We see that deliveries are about 50% of orders, and there is a construction time between ordering and delivering.

In the 1^st semester of 2021, almost 11m “compensated gross tons” of ships ordered in e.g., the S. Korean yards, the bigger since 2008! Cgtis equal to A* gt^b, where A expresses the influence from the ship type. E.g., an oil tanker, with double hull, has A = 48, while a car carrier has 15; b states the influence from size and gt is the gross tonnage. For tankers this was, in 2005, 0.57 (Stopford, 2009: p. 752-754).

Our feeling is that shipping will expand enormously in 2021 and thereafter, trying to rectify the low growth rates since end-2008-2021.

To make our analysis complete, scrapping is also a positive agent of technical progress (Figure 10), because it removes old technology from market in a permanent way, unlike laying-up, which is a temporary withdrawal!

As shown, scrapping peaked in 1986 with 29% of the existing vessels of an age of over 15 years. We see that scrapping is almost 3 times higher than deliveries, meaning a reduction in fleets. In July 2021, the price of scrap steel reached $600 per ton indicating an excess demand, perhaps due to the inactive period of the Pandemic!

Now, we will try to perform two estimations: 1) shipping technical progress in physical (production) terms, i.e., in tons, and 2) shipping technical progress in $ terms.

1) Let us take a newly-built tanker having a Capital quantity of 30,0oo dwt with a labor quantity of 26 persons, (data from Buckley, 2008: p. 369). She produces 28,200 tons per voyage. Her production function, in Cobb-Douglas form, therefore can be: 28,200t = Α_t30,000^β26^α. Assuming α = 0.15 and β = 0.94, then A_t = 7.04%. Given that α + β =1.09 > 1, there are also economies of scale in tanker shipping.

The constant α put equal to 0.15, given that this is the share of labor to total voyage cost; constant β put equal to 0.94 as this is the share of capital to total voyage production. This means that with constant Capital and Labor, in shipping, a shipowner can produce about 7% more production due to existing and embodied technical progress!

Cobb & Douglas (1928) found A_t = 1%. Goulielmos (2021b) found³⁷ A_t = 7% for tanker shipping, where t = 2008, due to a higher speed by 1 knot. Moreover, increasing capital quantity by 3 times, the tanker production increased by 5.5%, (rounded), i.e., beyond the 3-time increases in Capital, on data from Buckley, 2008: p. 165-170), due to the bigger size of a 225,000-dwt tanker (Table 4).

2) Now, we will estimate the contribution of technical progress to shipping industry by finding-out the reduction in sea transport cost (freight rate) that achieved over the whole post 2^nd World War (61 years), using a deflated freight rate index found in Stopford (2009: p. 757-758). The signs of technical progress in shipping, as shown (Table 5), are four.

Source: author; data from Table 3.

Source: Inspired by Stopford.

The technical progress is encouraged by the existence of an adequate demand for the services produced! We did not fail to stress this reality… The post 2^nd war sea trade rose more than 6 times (from 500 m tons to 3.2 billion tons, 1950-1973). Shipping companies improved also their familiarity with computers, and especially with PCs. Recently adopted also digitalization (Goulielmos, 2020a, 2020b). Before we proceed, we need to prove the next question.

For the argument that technical progress led to a lower transport cost per ton for charterers, we have to prove first that shipping industry is competitive, because then price rests down on minimum average cost. We can say that shipping markets of dry and liquid cargoes are competitive, meaning that there are a very large number of small charterers and shipowners, acting independently, and no one can influence freight rate (price).

We know that in shipping exist, on average, about 10,000 shipping companies small, medium and large. About 70 large shipping companies are in the first 10 top maritime nations (=700) (Goulielmos, 2017), which can influence supply for orders of a few million dwt and over! In charterers, too, exist large influential companies like the 7 oil majors in the past. capable of influencing supply. We will assume that shipping markets are purely competitive, but not perfect.

Perfect competition is surely rare in real life, and it demands: 1) identical services³⁸, called homogeneous, with perfect information; 2) free entry³⁹; this is more massive if profits are above normal; the free entry in shipping is important-and there is also a well-organized 2^nd hand ship market as when profits are above normal, new shipping companies enter, and normal profits are eliminated (Graph 6).

As shown, average cost equals freight rate in the long-run. As it is known, in the average cost, also normal profits are included. This is why people prefer perfect competition, as they pay the minimum possible, vis-a-cis imperfect markets! However, the average cost here is not only of the most efficient shipowner, but also of that of the “marginal” shipowner, who has the higher cost of all others!

So, competition provides the elimination of super (monopoly) profits, but not the elimination of high-cost firms, needed to satisfy demand! This means that new ships may be required to enter, but as shown elsewhere (Goulielmos, 2021a), is not guaranteed that the new ships have the lower total average cost (in the long run)!Worth noting is that competitive are not the newly-built ships, as most great economists, but Keynes, assumed for new machines! To be so, the newly-built ships have to have prices below the prices of the vintages before them! Then are more competitive. Greek shipowners know this…

Given our assumption that technical progress reduces the long run average freight rate (or cost of transport), using faster and bigger ships, and achieving shorter sea times, this, however, has to be confirmed by data (Figure 11) (Stopford, 2009).

As shown, the real (free of inflation) cost of sea transport, after reaching a top high in 1950-51, and in 1956, due to Korean War and the 1^st Suez Canal closure in 1956 fell down to 400 units, till 1972 (−60% for 14 years). There was an interval between 1973 and 1974, due to the 1^st oil crisis in 1973, when shipping was

producing at a higher sea cost, and then returned to 400 units’ mark, continuously falling till 2006.

Given that a typical low sea cost is 200 units of the index, then technical progress reduced sea cost by 2.6 times in 1947-1970, and from 1971, with the exception of 1972-1974, due to the 2^nd oil crisis in 1979 to 2007, by 2.4 times, a total of 5 times. So, A_t = 8.2% per annum (500%/61 years) in money terms. Inflation excluded, but, 4 wars, 2 oil crises, longer distances, 2 Suez Canal closures, were taken into account! We wonder what the progress of shipping could be, if there was peace!

All maritime economists have taken for granted that shipping industry is one of continuous technical achievements, but without providing proof for this in either physical or monetary nature. Apart from certain remarkable advances in ships’ sizes, nothing has been discovered in the production function of the individual vessel despite the long existence of the celebrated Cobb-Douglas production function. First, we proved in a definite way that in shipping there increasing returns to scale, meaning that it pays to pursue economies of scale if demand exists. Further, we calculated the share of Capital and Labor in the production, with the lion’s share to go to Capital, which is a right thing to see. The remarkable finding is that 8.2% per annum in $ terms technical progress passed on to charterers, and perhaps from them to consumers. In physical terms 15.73% additional production has been provided by the innovations applied in tankers.

Analysis covered the last 75 years of technical progress in shipping industry, since 1945. One definition, and target, of technical progress, was to improve vessels’ performance, and finally to reduce sea cost! However, the price of shipping services is determined in the first step by demand and supply, and the cost of shipping adjusts to it in a second step, following the rules of a competitive industry. Sea cost rests there down on long run average cost, free from monopoly profits.

An all-embracing factor reflecting technical progress in shipping was time spent in production. The advances in shipping technology, we believe, were in the right direction all along, and tried to achieve less maintenance, fewer crew, and lower shipbuilding cost! The last one is the most important! Economists assumed wrongly that new machines are cheaper (they are not due to a higher depreciation and profit requirements on capital invested).

As shown, using physical data of shipping production, and also monetary data, technical progress for the period of the last 61 years achieved a money benefit to world economy of 8.2% p.a., mainly aided by faster and bigger ships. In physical terms, production increased by 15.73%.

Technical progress in shipbuilding, reducing ship prices, is of prime importance for shipping. Of course, the shipbuilding cycle, following the shipping one, will reduce prices of ships, liking it or not! One step of course is to produce a still cheaper and lighter, steel, but equally strong; another step is to reduce the building time using digitalization; a third step is to economize on materials, on engines etc.; a fourth step is to use cheaper, but skilled, labor, perhaps using educated females.

This paper produced important policy implications for ports for which also we added an appendix. Ports have to adopt technical progress at the pace that ships embody it! Otherwise, they harm ships. Ports must realize that they provide services to ships, and these services must be produced at lower cost than hitherto.

Ports from monopoly firms must become competitive ones. Ports achieved reductions in costs, but was this for own benefit, or for the benefit of ships? The gross average speed of cargo-handling, per hatch, all right increased from 80 tons/day in 1950 to 100 in 1970, but there is a large room for further improvements. Are port pumps for tanker unloading⁴⁰ properly at 10,000 tons or so of petroleum per hour?

This paper was written by 3 friends, professors and colleagues, on the occasion that Professor Evangelos Sambracos—the third one—retired last on 1^st Sept. 2021! This paper should be considered as an “aide de memoir” to all three of us that the state of pension for a professor should not prevent him from writing papers!

The authors declare no conflicts of interest regarding the publication of this paper.

Goulielmos, A. M., Giziakis, C., & Sambracos, E. (2021). Can We Trace and Estimate the Technical Progress in Shipping Industry by Using the Cobb-Douglas Production Function? Modern Economy, 12, 1563-1592. https://doi.org/10.4236/me.2021.1210079

Ports and Bunker Suppliers get lion’s share out of ships (!): $892,271 out of $1,472,211 or 61%! So, the efforts of shipowners must be to reduce the time spent in ports and demand also a lower port cost, via INTERTANKO or INTERCARGO.

The port cost to be charged on the true carrying capacity of the ship, which is ship’s net dwt (less stores, bunkers and water…). These 3 items are transported free, but they increase by almost 60%, going from a standard tanker of 75,000 dwt to a 225,000 dwt!

Captains have to optimize (minimize) the factors, which antagonize⁴¹ dwt: stores etc. (200 tons), water (500) and fuel (5271), which were 5971 tons totally or 2.65%, on a total dwt for a 225,000-dwt tanker! These items cost $6.72 per mt or $40,125 per almost 50 days (plus 1 Suez Canal transit)! For a 7-voyage-year the above comes to $280,875! Of course, the proper amount of fuel cannot be reduced, and it had to be adequate for the ships to cross from point A to point B of bunker supply, plus to cope with weather conditions, and so on, but stores⁴² and water could be reduced. Certain ships have desalination units to economize on water. My analysis has revealed as a by-product that ports, they should provide to ships the so called “external economies” by applying newer technological progress.