Optimal Development Strategies in a Labor-Surplus Economy with Increasing Returns: Is Industrialization Desirable at All?

1983 ◽  
Vol 15 (9) ◽  
pp. 1151-1159
Author(s):  
T Miyao ◽  
K Nishimura
Keyword(s):  
Production Function ◽  
Capital Stock ◽  
Critical Value ◽  
Development Strategies ◽  
Increasing Returns ◽  
Rigorous Proof ◽  
Initial Capital ◽  
Optimal Development ◽  
Labor Surplus

The authors analyze the problem of optimal development strategies in a labor-surplus economy, where manufacturing production is subject to a convex-concave production function. Our contribution is to provide a rigorous proof of the existence of a critical value of capital such that industrialization is optimal if the initial stock of capital is above the critical value, whereas nonindustrialization is optimal if the initial capital stock is below the critical value.

OPTIMAL ENDOGENOUS GROWTH WITH NATURAL RESOURCES: THEORY AND EVIDENCE

2016 ◽  
Vol 20 (8) ◽  
pp. 2173-2209 ◽  
Author(s):  
Manh-Hung Nguyen ◽  
Phu Nguyen-Van
Keyword(s):  
Growth Rate ◽  
Natural Resources ◽  
Endogenous Growth ◽  
Production Function ◽  
Returns To Scale ◽  
Direct Proof ◽  
Increasing Returns ◽  
Equilibrium Path ◽  
Exhaustible Resource ◽  
Increasing Returns To Scale

This paper considers an optimal endogenous growth model where the production function is assumed to exhibit increasing returns to scale and two types of resource (renewable and nonrenewable) are imperfect substitutes. Natural resources, labor, and physical capital are used in the final goods sector and in the accumulation of knowledge. Based on results in the calculus of variations, a direct proof of the existence of an optimal solution is provided. Analytical solutions for the planner case, balanced growth paths, and steady states are found for a specific CRRA utility and Cobb–Douglas production function. It is possible to have long-run growth where both energy resources are used simultaneously along the equilibrium path. As the law of motion of the technological change is not concave, reflecting the increasing returns to scale, so that the Arrow–Mangasarian sufficiency conditions do not apply, we provide a sufficient condition directly. Transitional dynamics to the steady state from the theoretical model are used to derive three convergence equations of output intensity growth rate, exhaustible resource growth rate, and renewable resource growth rate, which are tested based on OECD data on production and energy consumption.

Intangible Capital and Firm Productivity

2017 ◽  
Vol 18 (2) ◽  
pp. 246-275
Author(s):  
Bishwanath Goldar ◽  
Yashobanta Parida
Keyword(s):  
Production Function ◽  
Capital Stock ◽  
Intangible Assets ◽  
Positive Impact ◽  
Rate Of Return ◽  
Intangible Capital ◽  
Firm Productivity

An estimate of intangible capital stock is made for a sample of about 3,200 Indian corporate firms for 2012–2013, based on investments made by the firms in various intangible assets during the previous 10 years. For manufacturing and services firms of the sample, three alternate specifications of a production function are estimated in which intangible capital is taken as an input. This analysis clearly reveals that intangible capital has a significant positive impact on productivity of manufacturing and services firms in India. The rate of return to intangible capital is found to be much higher than that to tangible capital.

Trade liberalization and its economic impact on developing and least developed countries

2014 ◽  
Vol 13 (3) ◽  
pp. 215-221 ◽  
Author(s):  
Shujaat Abbas
Keyword(s):  
Economic Growth ◽  
Trade Liberalization ◽  
Production Function ◽  
Capital Stock ◽  
Negative Impact ◽  
Sustainable Growth ◽  
Total Trade ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Significant Negative Impact

Purpose – This paper aims to investigate the impact of trade liberalization on economic growth of selected developing and least developed economies by augmenting standard production function. Design/methodology/approach – The panel fixed effect model is used to estimate impacts of macroeconomic variables on economic growth. Real GDP million US$ is taken as proxy for economic growth. The capital stock series for each cross-section is generated from gross fixed capital formation. The total trade to GDP is taken as proxy for trade liberalization. Findings – The result shows significant positive impact of selected macroeconomic variables on economic growth, except trade liberalization index. The one unit increase in trade liberalization deteriorates economic growth, of developing countries by −280.86 million US$ and least developing by −3555.09 million US$. Research limitations/implications – The significant negative impact indicates the relatively greater share of import than exports. The developing nations should develop production side and adopt export promotion policies besides managing imports for the achievement of sustainable growth. Originality/value – This study uses augmented production function and constructed capital stock for individual countries. The total trade to GDP is taken as index for trade liberalization and was found to have significant negative impact.

scholarly journals Trade and Development in a Labor Surplus Economy

2007 ◽  
Vol 7 (1) ◽  
Author(s):  
Edward B Barbier ◽  
Michael Rauscher
Keyword(s):  
Labor Market ◽  
Monopolistic Competition ◽  
Home Country ◽  
Agricultural Productivity ◽  
Returns To Scale ◽  
Utility Functions ◽  
Increasing Returns ◽  
Increasing Returns To Scale ◽  
Welfare Implications ◽  
Labor Surplus

Abstract This paper looks at a model in which two countries trade agricultural and manufactured commodities. The manufactured-goods sector produces with increasing returns to scale under conditions of monopolistic competition. It is shown that an increase in land endowment (or an increase in agricultural productivity) can have negative welfare implications for both countries. This outcome can result under three different scenarios: asymmetries across countries, i.e. a North-South model, a neoclassical labor market instead of a Lewisian market in the home country, and alternative utility functions.

scholarly journals Sectoral Variations on Technical Efficiency and Return to Scale in the Indonesian Economy

2016 ◽  
Vol 5 (2) ◽  
pp. 119-132
Author(s):  
Muchdie Muchdie
Keyword(s):  
Drinking Water ◽  
Regression Analysis ◽  
Gross Domestic Product ◽  
Technical Efficiency ◽  
Production Function ◽  
Capital Stock ◽  
National Level ◽  
Economic Sectors ◽  
National Statistics ◽  
Douglas Production Function

This paper discusses on sectoral variations of technical effciency and return to scale in the Indonesian economy. Employing regression analysis of Cobb-Douglas production function, thesecoefficientswere calculated. Nine economic sectors in the Indonesian economy: Agriculture, Mining and Quarying, Manufacturing, Electricity,Gas and Drinking Water, Construction, Trade, Hotel and Restaurant, Transportation and Communication, Finance, Rental and Corporate Services, and Services, were exercised to study the variation of those coefficiens. Sectoral data on gross domestic product, capital stock and employment are those from the years 1967 to 2007 collected from many documents available at the National Statistics Agency. The result shows that the coeffiecients of technical efficiency do vary among sectors. Those sectors in which the coefficients were above that at the national level, experienced decreasing return to scale. On the contrary, those sectors in which the coeffiecients were below that at national level, experienced increasing return to scale. DOI: 10.15408/sjie.v5i2.3400

scholarly journals The Economies Scale of Agricultural Product Processing Companies Listed on Stock Exchange in Hochiminh City and Hanoi, Vietnam

2022 ◽  
Author(s):  
Le Thanh Tung
Keyword(s):  
Panel Data ◽  
Production Function ◽  
Stock Exchange ◽  
Returns To Scale ◽  
Policy Implications ◽  
Increasing Returns ◽  
Ho Chi Minh City ◽  
Agricultural Product ◽  
Increasing Returns To Scale ◽  
Douglas Production Function

This study applied the Cobb-Douglas production function to identify economics efficiency of 18agricultural product processing companies listed on the Stock exchange in Ho Chi Minh City(HOSE) and Hanoi (HNX) in such sectors as fisheries, rubber and sugar in the period 2009-2013.The method employed FEM and REM models using panel data. The results showed thatperformance of all and each sector in this study has increasing returns to scale. In particular,firms in the sectors of fisheries and rubber primarily relied on raising capital to increasetheiroutput value, while those in the sugar sectormainly increase labors toimprove theiroutput value. Finally, the paper also provides some policy implications to improve theefficiency of capital and labor in the agricultural product processing companies.

Using an Empirically Estimated Production Function for Major League Baseball to Examine Worker Disincentives Associated with Multi-Year Contracts

1997 ◽  
Vol 41 (2) ◽  
pp. 77-83 ◽  
Author(s):  
Mark D. Woolway
Keyword(s):  
Production Function ◽  
Major League Baseball ◽  
Returns To Scale ◽  
Job Security ◽  
Increasing Returns ◽  
Employee Productivity ◽  
Cross Sectional ◽  
Increasing Returns To Scale ◽  
Team Success ◽  
Major League

This paper uses cross-sectional data from the 1993 Major League Baseball season to derive the production function for the industry. Using that function, the hypothesis that employee productivity drops in response to the job security of a multi-year contract is test ed by comparing the marginal products of players in the year preceding and the year following the signing of a multi-year contract. I find that the production function for Major League Baseball exhibits increasing returns to scale and, contrary to the popular belief of observers of the sport, hitting is more important to team success than pitching. I also find compelling, statistically significant evidence of worker disincentives associated with multi-year contracts.

scholarly journals A Study of the Effects of Non-oil Exports on Iranian Economic Growth

2010 ◽  
Author(s):  
Naser Ali Yadollahzadeh Tabari ◽  
Mohammad Nasrollahi
Keyword(s):  
Economic Growth ◽  
Labor Force ◽  
Production Function ◽  
Capital Stock ◽  
Negative Effects ◽  
Function Type ◽  
Positive Effects ◽  
Long Run ◽  
Oil Exports ◽  
Oil Export

This paper examines the effects of Iranian non-oil exports on output during the years 1980-2007. We use an augmented neoclassical production function type and apply VECM methodology to estimate the short and long-run effects. The results show: negative effects of non-oil export on non-Export output, while capital stock and labor force have positive effects on non-Export GDP.

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