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

• Decomposes the technological effect on GDP into neutral and non-neutral components. 1 1 Funded by the European Union - NextGenerationEU, Mission 4 Component 2 - ECS00000036 - CUP[B63B22000010001]. • Disentangles pure factor productivity effects from those driven by factor adjustments. • Non-neutral component accounts for most OECD productivity growth (1994–2019). • Technology-induced factor adjustments explain most OECD productivity growth. • Capital is the primary source of technology-induced OECD productivity growth. . 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.