Extended Cobb-Douglas Production Function Research Articles

Powering Qatar’s agricultural growth: Examining the link between electricity prices and development

This study analyzes the impact of electricity prices on the development of the agriculture sector in Qatar, using annual data from 2003 to 2019. Its findings contribute to addressing a gap in current literature and offer valuable perspectives on the sector’s obstacles and potential prospects. An extended Cobb-Douglas production function was employed as a theoretical framework, in conjunction with several econometric techniques, including Fully Modified Least Squares, Dynamic Ordinary Least Square, Canonical Cointegration Regression, and Gets, to analyze the persistent relationship between electricity prices, and the gross value added of the agriculture sector. Our research found that electricity prices exert a positive effect on agricultural development. Although the magnitude of the impact was small over the long term, it remained statistically significant. Specifically, the elasticity of the electricity prices ranged between 0.097–0.11, whereas the elasticity of another examined variable, labor productivity, was also positive and ranged between 0.67–0.74. These empirical findings support the ongoing government policy to reform energy prices, increase vegetable production using modernized hydroponic systems, and reduce groundwater use for irrigation, among other policies to sustain food production. Clearly, if these policy options are managed properly, the agriculture sector can play a significant role in diversifying the economy, maintaining environmental conditions and improving food sustainability.

Comparative Assessment of the Human Capital Impact on the Population Income in the European and Asian Regions of Russia

The relevance of the study is explained by the link between economic growth and investment in human capital.The purpose of the study is a comparative analysis of the dynamics of the return of physical and human capital in the European and Asian regions of Russia.Materials and methods. In the article, the authors use the extended Cobb-Douglas production function and conduct a regression spatial analysis based on data of the official Russian statistics.Results. There are estimates of the relationship between the income of the population of regions with the number of employed, with the volume of fixed assets of regions and human capital; the wage fund of the population of regions with the number of employed, with the volume of fixed assets of regions and human capital, the elasticity coefficients are justified. The authors analyzed and interpreted the values of the elasticity coefficients. In particular, the coefficients of elasticity of household income by fixed assets for Asian and European regions tend to decrease; the authors explain this by the low level of investment in the renewal of fixed capital at enterprises. The coefficients of elasticity of income of the population by the number of people employed in the economy of the regions are noticeably higher and tend to increase. At the same time, human capital has a stronger impact on the income of the population than fixed assets and the number of people employed in the economy of the regions. There is a decrease in the influence of human capital on the income of the population in the group of European regions of Russia at the end of the period under review and the relative stability of its returns in the Asian group of regions.Conclusion. The impact of human capital on the income of the population differs significantly in the European and Asian regions of Russia. The authors identified efficiency trends and features of the use of the main factors of production in different groups of regions of the Russian Federation in the period under review. Scientific significance is the generalization of knowledge about the role of human capital in economic development, technology transfer and increasing the investment attractiveness of settlements and regions due to it; obtaining statistically significant models for assessing the economic return of human capital.

Unlocking the effects and optimization path of financial support for improvement in environmental quality and rural revitalization development: an empirical analysis based on provincial data of Shaanxi province.

This study establishes an economic financial support model for the improvement of environmental quality through the development rural revitalization based on the extended Cobb-Douglas production function. Using statistical data from Shaanxi Province, China, from 2004 to 2019, a vector autoregressive (VAR) model is used to empirically analyze the development effect of financial support for rural revitalization and to give the focus points and optimization paths for financial support for environmental quality, rural revitalization and sustainable development. The research results show that financial support plays an active and long-term role in improving environmental quality and promoting rural revitalization and sustainable development. Specifically, the effect of financial instruments in supporting rural revitalization and sustainable development is continuous. In the insurance system, increasing the scale of agricultural insurance support and expanding the coverage of agricultural insurance are key to improving environmental quality and promoting rural revitalization and sustainable development. Therefore, financial policy makers should improve the targeting of financial instruments to provide the right guidance for improving the quality of rural environment and enhancing rural economy, so as to ultimately realize rural revitalization in China.

How Does Electricity Affect Economic Growth? Examining the Role of Government Policy to Selected Four South Asian Countries

Electricity consumption and government policy are two vital elements for economic growth. Thus, this study explores the roles of electricity use and government policy in the economic growth of the selected four South Asian countries over the period from 1980 to 2014. The study includes the government policy variable in the extended Cobb–Douglas production function of the electricity driven growth model, which was absent in earlier studies. The pooled mean group-based panel autoregressive distributed lag (P-ARDL) method is used for empirical investigation, while fully modified ordinary least squares (FMOLS) and dynamic ordinary least square (DOLS) methods are used for checking the sensitivity of the P-ARDL estimates. Our results reveal that the effects of electricity, government spending, financial development and capital formation have significant positive effects on the economic growth of South Asia. However, exports and imports are found to have detrimental effects. Causality test reveals a unidirectional causality from electricity consumption to economic growth that supports the growth hypothesis. Following the findings, important policy recommendations are made to foster the economic growth in the South Asian countries.

The effects of structural reforms on economic growth

This study investigates the effects of structural reforms in fiscal, financial, trade, and real sectors on economic growth for 56 countries within the IMF-Supported Program over the 2002-19 period. Using a novel database (IMF Monitoring of Fund Arrangements-MONA), it constructs new structural reform indexes for each sector employing the Z-score approach. The present study highlights that all structural reforms except for real sector reforms in all models, constructed based on the extended Cobb-Douglas production function, have a positive and statistically significant impact on economic growth. The robustness of the models is confirmed by using two different structural reform indexes for each sector and two different estimators considering cross-sectional dependence. Empirical findings point to the structural reforms being potentially key factors that provide strong long-term growth performance for countries. Hence, along with the relevant traditional policies and sufficiently developed institutions, policymakers should extend the structural reforms to lift potential growth and provide lasting economic recovery.

Trust or bust: Growth effects of knowledge, human and social capital revisited

• Trust appears to be one of the main drivers of productivity growth across EU subnational regions. • Our estimations suggest the presence of gravity effects emanating from social and human capital in which some regions lose against others nearby that have more abundant social and human capital. • Productivity gains prompted by social capital appear to diminish over time. Social capital consists of trust, collective values, and shared norms. It helps society to work efficiently and, hence, promotes knowledge accumulation and growth. This paper identifies the contribution of social capital to differences in total factor productivity among European subnational regions, but, unlike other studies, it focuses on the effects of interregional differences in social capital. To do so, the paper employs a spatial Durbin model of a social-capital extended Cobb-Douglas production function. Our results suggest that transfers of knowledge might be secondary to the presence of collectivism and human capital in knowledge-generating regions. Although knowledge can cross boundaries, an absence of skills and trust limits local growth capacity. Our estimations also suggest the presence of gravity effects emanating from social and human capital in which some regions lose against others nearby that have more abundant social and human capital.

Recomputation of Public Capital Based on PIM and the Effect on China Regional Economic Growth

This paper first reestimates the public capital stock of each China province from 1994 to 2019 by improving the computing method of the components of the perpetual inventory method (PIM). Then, it brings the public investment and public capital into the extended Cobb-Douglas production function and explores the mechanism of public investment affecting economic growth from the regional perspective. Furthermore, through the analysis of the Local Government Financing Vehicles (LGFVs) as the major investor of local public investment during the last two decades, This paper confirms the importance of complementary factors such as institutional innovation and effective management of the public infrastructure in making public investment an “effective catalyst for growth” (Kessides, 1993).

An Analysis of the Relationship between Energy Trilemma and Economic Growth

This study analyzed the relationship between energy trilemma (ET) and economic growth in 109 countries between 2000 and 2020 across income levels and regions. This study constructed an extended Cobb-Douglas production function including three elements of ET such as energy security, energy equity, and environmental sustainability as their effects on economic growth differ by income level and region. The methodology of this study differs from that of previous studies, which utilized the representative value of ET based on principal component analysis. To analyze the panel series, this study utilized econometric procedures, panel regression of pooled ordinary least squares (OLS), feasible generalized least squares (FGLS), fixed effects, and dynamic panel analysis of generalized methods of moments (GMM) by three income levels. In addition, this study undertook a time series analysis between ET and economic growth for each country. The results showed that each element of ET is not balanced. Moreover, each element can contribute differently to economic growth due to differences in income levels and regions. This study suggested that a balanced environmental policy reflecting various aspects of ET is required and can contribute to the economic growth.

Land Use Transitions under Rapid Urbanization in Chengdu-Chongqing Region: A Perspective of Coupling Water and Land Resources

Land resources and water resources are the important material basis of economic and social development, and their pattern determines the pattern of development. Based on the panel data of the Chengdu–Chongqing Economic Circle from 2011 to 2018, this paper evaluates the matching degree of water and land resources, and their respective matching degrees with the economic development in the Chengdu–Chongqing Economic Circle with the Gini coefficient method. Based on the two-way fixed effect model, an extended Cobb–Douglas production function model is established to analyze the sensitivity of economic growth to land and water factors. In addition, the restriction degree of water and land resources to the economic development of the Chengdu–Chongqing Economic Circle is measured quantitatively by using the growth damping coefficient. The results show that the water and land resources and economic development of the Chengdu–Chongqing Economic Circle have a high matching degree, but the inner cities have a great difference. The contribution of water resources to economic growth is greater than that of land resources. Both of them have a little growth drag, which shows that industrial development has disposed of the dependence of water and land resources. The development of the Chengdu–Chongqing Economic Circle needs to play the role of technological progress in promoting economic growth, and at the same time optimize the use of water and land resources to reduce its constraints on the economic growth. Finally, the policy suggestions of matching water and land resources and economic growth in different regions are put forward.

Which Factors Affect Pomegranate Production in Kandahar? An implementation of the Cobb-Douglas Production Function

Pomegranates are one of the most important fruits in Kandahar province, which is famous for its pomegranates around the world. Pomegranates play a vital role in the socio-economic life of those who grow them. This study empirically analyzed the factors affecting pomegranate production in Kandahar province in Afghanistan. The study used primary data collected from 200 pomegranate growers in Dand, Panjwai and Daman districts of Kandahar province. These growers were selected using a random sampling method and the data was collected using a structured, pre-tested questionnaire. An ordinary least squares regression model, based on an extended Cobb-Douglas production function, was used to analyze the data. The farmers’ periodic income per hectare was used as a monetary measure of pomegranate production and was defined as the dependent variable. The explanatory variables considered for the study were average cost of fertilizer per hectare, average cost of urea per hectare, average cost of DAP per hectare, average cost of land preparation per hectare, average cost of chemicals per hectare, average cost of labor per hectare, and average cost of water supply per hectare. The results of the analysis show that of these seven independent variables, number female household members, average cost of DAP, average cost of urea, and average cost of water supply are significant at the p<0.01 level, and the rest of the listed variables are insignificant at the p<0.05 level. Furthermore, the R2 value of the model (26%) suggests that there are other factors not included in the model which can influence pomegranate production. In order to enhance the productivity of pomegranate production in Kandahar province, the government should provide farmers with assistance so that they can control those factors which affect the productivity of the fruit.

How Banks’ Resources at the Retail Level Affect Their Output?

The study aims to measure the productivity of the Saudi banking sector at the retail level using secondary data for 11 local banks from the period 2015-2019. The study uses an extended version of the Cobb-Douglas production function to account for the fact that as banks openup more retail branches, they will need to employ more labor. The extended Cobb-Douglas production function was estimated using the two-way fixed effect model to account for unobserved heterogeneity across Saudi banks resulting from differences in labor competencies and leadership style. Besides, the model accounts for unobserved heterogeneity among Saudi banks due to the advancement in electronic services over time. The results showed that labor, branches, customers' deposits, and fixed deposits have a positive effect on the total value of generated loans. Conversely, ATM has an insignificant effect on generated loans. The average scale elasticity shows that the Saudi banks at the retail level are operating under decreasing returns to scale. The average marginal rate of technical substitution shows that Saudi banks need at least one ATM to replace one unit of labor at the retail level while keeping the same level of output.

Investigating the asymmetric impact of energy consumption on reshaping future energy policy and economic growth in Iran using extended Cobb-Douglas production function

This study scrutinised the symmetric/asymmetric impact of energy consumption on the economic growth (RGDP) of Iran in the framework of the extended Cobb-Douglas production function from 1970 to 2017. The linear and nonlinear Autoregressive Distributed Lag (ARDL) confirmed that a positive and negative shock on energy consumption had the same impact on RGDP. The empirically obtained outcomes supported confirmed the positive impact of energy consumption and capital stock on GDP in both the short and long terms. The opposite was true for CO2 emissions and labour force. The results of a Toda Yamamato (T-Y) test showed bidirectional causality between CO2 emissions and energy consumption. Moreover, CO2 emissions and energy consumption exhibited a causality effect on economic growth. Furthermore, residual diagnostic/model stability tests and sensitivity analyses based on Fully Modified Ordinary Least Squares (FM-OLS) and Dynamic Ordinary Least Squares (DOLS) verified the perfectness and robustness of the results obtained from the ARDL model, respectively. Based on the growth-enhancing and environment-degrading effects of energy consumption, switching from conventional energy to renewable energy must be considered in national energy policies. Appropriate policy implications were recommended under two categories: market-based interventions (both directly and indirectly) and non-market-based interventions.

Driving effect of CO2 emissions on economic growth—application of empirical likelihood for generalized method of moments

In this paper, the panel data of 19 out of 21 APEC members from 1993 to 2018 is selected as a research sample. Firstly, based on the extended Cobb-Douglas production function, the relationship between CO2 emissions and economic growth is explored via the panel data methods, which fully consider the endogeneity between variables and the unobserved individual heterogeneity. Secondly, to examine the driving effect of CO2 emissions on economic growth, the Empirical Likelihood for Generalized method of moments with nonparametric estimation characteristics is utilized to calculate the returns on economic scale and the corresponding confidence interval. The results show that CO2 emissions have a significant positive impact on economic growth. Moreover, the confidence interval of returns to economic scale is very small, indicating current levels of CO2 emissions have reached the limit to drive economic growth when the technical level, labor employment, capital, urbanization, trade, and other factors tend to stabilize. Finally, some recommendations were presented to achieve sustainable development goals. Highlights In combination with the extended Cobb-Douglas production function theory, employs 2SLS and GMM method that takes unobserved the heterogeneity between regions and endogeneity between variables in consideration to explore the relationship between CO2 emissions for economic growth. The extended model of the GMM-Empirical Likelihood for Generalized Moment Method (GMEL) is used to investigate whether the Driving effect of CO2 emissions on Economic Growth reaching its limit or not? Selected the panel data of APEC countries or regions as the research samples, which has never been studied by scholars. The GMEL is a non-parametric statistical inference method that has higher estimation accuracy than the traditional parametric estimation method. The confidence interval constructed by the GMEL method has the advantages of domain retention, transformation invariance.

The Effect of Investment Climate on Productivity of Food and Beverages Industries in Eswatini

Food security and job creation are among the top priorities of the government of Eswatini. To address these priorities, the government have made substantial amount of investment to support the agricultural sector over the years. Regardless of these policy intervention, Eswatini is still an importer of food and unemployment remains substantial high. The study examined the influence of investment climate on productivity of food and beverages industries in Eswatini. Findings of this study will assist the government of Eswatini to design focused policy interventions in order to attract more local and foreign direct investment.A Cobb-Douglas production function for Eswatini of manufacturing industries was estimated using 2006 cross sectional data from the World Bank to produce a measure of TFP for each industry. In addition, an extended Cobb-Douglas production function was estimated with investment climate variables for selected manufacturing industries.The results showed that manufacturing industries in Eswatini are labour intensive and competition from informal sectors is the main obstacle faced by manufacturing industries in Eswatini. The findings of the study further reveals that an increase in corruption cause a decrease in productivity. The study recommends investment in institutional reforms especially to fight against corruption and efficacy in the provision of public goods and services. It further recommends a resilient support and regulation of the informal sector.

The Effects of R&D Expenditure and Technological Spillover on Industry Revenues in Japan

This research analyzes the effects of research and development (R&D) activities on industries' sales based on accounting information for the Japanese manufacturing sector from 2001–2017, with the aim of accurately grasping the current situation. The analytical model is based on the traditional extended Cobb-Douglas production function. By avoiding the statistical problem of endogeneity and serial correlation, a multiple regression analysis was used to understand the statistical superiority of the effects of R&D expenditure and technological spillovers on sales figures. This study also analyzes the relationship between acceptance and supply of technological spillovers in Japanese industries to understand the current state of the impact of technological spillovers. In conclusion, the effects of recent R&D activities in the Japanese manufacturing sector are low. After the 1997 Asian Currency Crisis, Japan's economic growth has declined; this study could help improve R&D activities that support economic growth in this poor growth climate.

Evaluating the impact of clean energy consumption and factor allocation on China’s air pollution: A spatial econometric approach

China’s air pollution has become a widespread concern in the academic world, but there are few studies based on spatial measurement methods to quantify the impact of clean energy consumption and factor allocation on a variety of pollutants. Based on an exploratory spatial data analysis, a spatial Durbin model and extended Cobb-Douglas production function (C-D production function) are used to study the direct, indirect and total effects of clean energy consumption and element allocation on China’s air pollution emissions. The exploratory spatial data analysis results showed that the three emissions had significant agglomeration effects, and the spatial aggregation patterns of the emissions were similar to the patterns of fossil energy consumption spatial aggregation. The spatial Durbin model estimation results showed that the clean energy consumption proportion and factor allocation of energy and labour inhibited air pollution emissions. The spatial spillover effect was greater than the direct effect. The fossil energy structure and factor allocation of energy and capital stock were positively related to air pollution emissions. These findings help to formulate regional industrial policies and energy policies and contribute to the governance of air pollution and the sustainable development of economic, environmental and energy resources.

Natural gas consumption and economic growth nexus: an investigation for France

PurposeThe purpose of this study is to investigate the relationship between natural gas consumption and economic growth of France.Design/methodology/approachTo analyze the relationship, an extended Cobb–Douglas production function is used. The auto-regressive distributive lag bounds testing approach is applied to test the existence of the long-run relationship between the series. The vector error correction model Granger causality approach is implemented to detect the direction of causal relation between the variables.FindingsThe results show that variables are cointegrated for the long-run relationship. They also indicate that natural gas consumption, exports, capital and labor are the contributing factors to economic growth in France. The causality analysis indicates that feedback hypothesis is validated between gas consumption and economic growth. The bidirectional causality is also found between exports and economic growth, gas consumption and exports and capital and gas consumption.Research limitations/implicationsThe feedback hypothesis between gas consumption and economic growth implies that adoption of energy conservation policies should be discouraged; rather, gas consumption and economic growth policies should be jointly implemented.Originality/valueThis study is an original work for France and shows the results of the relationship between natural gas consumption and economic growth. In line with the results of this study, new direction for policy makers is opened up to formulate a comprehensive energy policy to sustain long-term economic growth in France.

Assessment of the social capital impact on the household income of the Russian Federation regions

Purpose of research.To identify the impact of social capital on economic development and income, using mathematical modeling. Also, based on the analysis of modern domestic and foreign literature on the theoretical foundations of social capital, to give a qualitative and quantitative characteristic of such indicators of social capital as marriage, divorce, the ratio of these indicators and the mechanisms of its possible impact on the income of Russian citizens. Materials and methods.General scientific methods such as analysis and synthesis, induction and deduction, empirical methods were used to obtain scientific results. The theoretical basis of the study is the fundamental theoretical work and publications of Russian and foreign scientists in the field of social capital research as a factor affecting the development of the national economy as a whole and the income of the Russian population, in particular. The authors propose a methodological approach that distinguishes the study from other economists – this is mathematical modeling using the extended Cobb-Douglas production function with the inclusion of indicators representing human and social capital in the number of independent variables of this function. The variable, characterizing social capital is a statistical indicator “the ratio of marriage and divorce”, as a characteristic of the state of social (or its components of moral capital) in Russia. The calculations used data from statistical reference books “Regions of Russia. Socio-Economic Indicators”, “weighted” regressions, the indicator “number of people employed in the region’s economy” was used as a weighted variable. Results.Calculations of spatial regression equations, using official statistics are carried out. The statistical evaluation of the effect of social capital on the income differentiation of the population in the regions of Russia is presented. Social capital, as shown by the calculations of the regression equations, along with the fixed capital per worker and the average level of education of the population, employed in the economy of the regions, has a significant impact on both income and differentiation of income of the population of Russian regions. In addition, calculations indicate that the frequency of divorces adversely affects the income of the employed population of the regions of Russia. Conclusion.Calculations and analysis of statistical indicators show that social capital in Russia does not accumulate, but degrades. This can lead to undesirable consequences in terms of economic development, preventing the movement along progressive trajectories. In particular, for example, to the spread of such a negative phenomenon as information asymmetry in different groups: at work or in the family, which can interfere with productive work and result in lower quality of work, service, efficiency and competitiveness. Therefore, there is an urgent need to envisage a number of measures to accumulate and save social capital. Including the strengthening of the family, which makes a significant contribution to the creative processes of trust, and accordingly, the growth of social capital.

Measurement of the contributions of science and technology to the marine fisheries industry in the coastal regions of China

The use of technology is of critical importance to the development of fisheries. In this study, we use the extended Cobb-Douglas production function and the Solow residual method to measure differences in the contributions of science and technology (S&T) to the marine fisheries industry in the coastal regions of eleven Chinese provinces and cities. To do so, we examine panel data for these regions from 1988 to 2016. The results show that the contributions of S&T to the marine fisheries industry in these coastal regions from 2011 to 2015 were all greater than 55%, with regional differences but no significant spatial correlations. S&T have become the main driving forces of growth in the marine fisheries industry. We make three suggestions to improve the contributions of S&T to the marine fisheries industry and to promote its sustainable development.

Does OFDI Promote Green Growth of China's Industrial Economy?—from the Perspective of Provincial Panel Data Hui FANG

Based on the theory of OFDI and the extended Cobb-Douglas production function, this paper uses provincial panel data to study the mechanism and promoting effect of OFDI on the green growth of local industrial economy. The research finds that although provincial OFDI can indirectly and directly promote the green growth of local industrial economy through various investment effects, its comprehensive promotion effect is negative in the current period; OFDI can strengthen the green growth of local industrial economy through environmental regulation, while OFDI can restrain the green growth of local industrial economy through consumption level of Residents. When environmental protection regulations and residents' consumption level are added, OFDI has a significant promoting effect on the green growth of local economy in industry. Finally, on the basis of the conclusions of the study, the corresponding policy recommendations are put forward.