Applying the Cobb-Douglas Production Function for Analysing the Region’s Industry
The industry plays a key role in Russia’s economic security. Significant interregional gaps in the level of socio-economic development made topical the issue of optimizing the distribution of production forces in the constituent entities of the Russian Federation through increasing the eff...
| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
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Russian Academy of Sciences, Institute of Economics of the Ural Branch
2020-03-01
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| Series: | Экономика региона |
| Subjects: | |
| Online Access: | https://www.economyofregion.com/data/jarticles/3255.pdf |
| _version_ | 1797765416848719872 |
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| author | Nikolay Vladimirovich Suvorov Rustem Rinatovich Akhunov Roman Vladimirovich Gubarev Evgeniy Ivanovich Dzyuba Fanil’ Saitovich Fayzullin |
| author_facet | Nikolay Vladimirovich Suvorov Rustem Rinatovich Akhunov Roman Vladimirovich Gubarev Evgeniy Ivanovich Dzyuba Fanil’ Saitovich Fayzullin |
| author_sort | Nikolay Vladimirovich Suvorov |
| collection | DOAJ |
| description | The industry plays a key role in Russia’s economic security. Significant interregional gaps in the level of socio-economic development made topical the issue of optimizing the distribution of production forces in the constituent entities of the Russian Federation through increasing the efficiency of investment and industrial policy at the meso-level. In our opinion, the efficiency of such policy is impossible without modern methods of economic and mathematical modelling and information technologies. The Cobb-Douglas production function is still an adequate method for an accurate assessment of production capacities of the industry both in the whole country and it’s regions. At present, such method is being actively developed in two directions: the function’s modification through “saturation” with different factors and improvement of the approaches to determining its dynamic (changing in time) parameters. In this study, we hypothesized the possibility of building an adequate Cobb-Douglas production function with static and dynamic parameters, using the case of the Republic of Bashkortostan’s industry for the period from 2006 to 2016. The first hypothesis about using static parameters for building Cobb-Douglas production function was empirically rejected. In contrast, we have confirmed the second hypothesis. We defined dynamic parameters of the Cobb-Douglas production function using the alternative method of linear regression (AMLR). This method accurately assesses production capacities of the Republic of Bashkortostan. The choice of the method is not random. First of all, its use allows, in any case, ensuring a correct economic sign of parameters with factor indicators (labour and capital). Secondly, the original method of calculations, using the growth rates of the indicators, ensures high accuracy of verifying the model parameters. Thus, the conducted calculations have shown that the dynamics of the regular component explains 57.4 % of variance of the initial time series (remainder functions after defining the mode l parameter s using the AMLR) . Combine d with other econometric methods , the application of the developed model will also enable an accurate forecast of the production capacities of the industry in regions. The study’s results can be applied for developing the investment and industrial policy of the Republic of Bashkortostan. |
| first_indexed | 2024-03-12T20:09:55Z |
| format | Article |
| id | doaj.art-a2931b2a0eeb4c35acdd922cf3449977 |
| institution | Directory Open Access Journal |
| issn | 2072-6414 2411-1406 |
| language | English |
| last_indexed | 2024-03-12T20:09:55Z |
| publishDate | 2020-03-01 |
| publisher | Russian Academy of Sciences, Institute of Economics of the Ural Branch |
| record_format | Article |
| series | Экономика региона |
| spelling | doaj.art-a2931b2a0eeb4c35acdd922cf34499772023-08-02T01:46:49ZengRussian Academy of Sciences, Institute of Economics of the Ural BranchЭкономика региона2072-64142411-14062020-03-01161187200https://doi.org/10.17059/2020-1-14Applying the Cobb-Douglas Production Function for Analysing the Region’s IndustryNikolay Vladimirovich Suvorov0Rustem Rinatovich Akhunov1Roman Vladimirovich Gubarev2Evgeniy Ivanovich Dzyuba3Fanil’ Saitovich Fayzullin4Institute of Economic Forecasting of RASUfa Federal Research Center of RAS Plekhanov Russian University of Economics Division of All-Russia People’s Front in Republic of BashkortostanInstitute of Social and Economic Research of the Ufa Federal Research Center of RAS The industry plays a key role in Russia’s economic security. Significant interregional gaps in the level of socio-economic development made topical the issue of optimizing the distribution of production forces in the constituent entities of the Russian Federation through increasing the efficiency of investment and industrial policy at the meso-level. In our opinion, the efficiency of such policy is impossible without modern methods of economic and mathematical modelling and information technologies. The Cobb-Douglas production function is still an adequate method for an accurate assessment of production capacities of the industry both in the whole country and it’s regions. At present, such method is being actively developed in two directions: the function’s modification through “saturation” with different factors and improvement of the approaches to determining its dynamic (changing in time) parameters. In this study, we hypothesized the possibility of building an adequate Cobb-Douglas production function with static and dynamic parameters, using the case of the Republic of Bashkortostan’s industry for the period from 2006 to 2016. The first hypothesis about using static parameters for building Cobb-Douglas production function was empirically rejected. In contrast, we have confirmed the second hypothesis. We defined dynamic parameters of the Cobb-Douglas production function using the alternative method of linear regression (AMLR). This method accurately assesses production capacities of the Republic of Bashkortostan. The choice of the method is not random. First of all, its use allows, in any case, ensuring a correct economic sign of parameters with factor indicators (labour and capital). Secondly, the original method of calculations, using the growth rates of the indicators, ensures high accuracy of verifying the model parameters. Thus, the conducted calculations have shown that the dynamics of the regular component explains 57.4 % of variance of the initial time series (remainder functions after defining the mode l parameter s using the AMLR) . Combine d with other econometric methods , the application of the developed model will also enable an accurate forecast of the production capacities of the industry in regions. The study’s results can be applied for developing the investment and industrial policy of the Republic of Bashkortostan.https://www.economyofregion.com/data/jarticles/3255.pdfrussian regionindustryassessment of production capacitiescobb-douglas production functionlabourcapitalgrowth ratesstatic and dynamic parametersalternative method of linear regressiontime seriesregular and random |
| spellingShingle | Nikolay Vladimirovich Suvorov Rustem Rinatovich Akhunov Roman Vladimirovich Gubarev Evgeniy Ivanovich Dzyuba Fanil’ Saitovich Fayzullin Applying the Cobb-Douglas Production Function for Analysing the Region’s Industry Экономика региона russian region industry assessment of production capacities cobb-douglas production function labour capital growth rates static and dynamic parameters alternative method of linear regression time series regular and random |
| title | Applying the Cobb-Douglas Production Function for Analysing the Region’s Industry |
| title_full | Applying the Cobb-Douglas Production Function for Analysing the Region’s Industry |
| title_fullStr | Applying the Cobb-Douglas Production Function for Analysing the Region’s Industry |
| title_full_unstemmed | Applying the Cobb-Douglas Production Function for Analysing the Region’s Industry |
| title_short | Applying the Cobb-Douglas Production Function for Analysing the Region’s Industry |
| title_sort | applying the cobb douglas production function for analysing the region s industry |
| topic | russian region industry assessment of production capacities cobb-douglas production function labour capital growth rates static and dynamic parameters alternative method of linear regression time series regular and random |
| url | https://www.economyofregion.com/data/jarticles/3255.pdf |
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