R&D project selection: Productivity considerations
The paper consists of a theoretical discussion of the circumstances justifying the use of RD re-equip with purchased existing best-practice technology; or use R&D to develop new technology. 
 
 
 
The choice depends on which of the four following situations exist: 1) When the productivity of existing capacity is well below its potential and is also well below that of the industry's best-practice; in this case the right strategy is first to bring actual productivity up to potential, and then to consider the purchase of best-practice. 2) When productivity is well up to potential but is well below best practice; the advice is then to purchase best-practice. 3) When existing capacity is already best-practice but productivity is well below capacity; in this case productivity of existing plant should be increased. 4) When existing capacity is bestpractice and productivity is near the maximum; then and only then is R&D to develop new technology justified. 
 
 
 
The paper concludes with a brief account of the process to be undergone between the establishment of a case for R&D using the above criteria and, if R&D is undertaken and completed, the retrospective review of its outcome.
Productivity measurement at the plant level
A system of productivity indices, suitable for the plant level, is developed. The productivity of each input factor is measured separately against standard, input per unit of output, figures. This system enables the decomposition of comparative indices into components, whereby the contribution of each component to productivity differentials can be determined. A model is proposed for aggregating the single factor (physical) productivities into an overall (economic) index.
The measurement of efficiency relative to a frontier production function.
A method is presented for estimating a frontier production function allowing economies and diseconomies of scale using linear programming techniques. The general applicability of this function is illustrated by considering the neutral and nonneutral cases. Indexes of technical, price, and economic efficiency of production of observations of equal scale are introduced. Three equivalent efficiency indexes are offered which measure the efficiency of alternative scale activities. Utilization of the efficiency indexes in determining the nature of the production function, causes of observed inefficiency, and the degree and nature of technological advance are discussed.