Economics

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Production Behavior and Technology: A Production Function Approach
(A.A.U, 2000-09) Ayeligne, Taddese; Asgedom, Getachew (Dr)
The growth of the industry sector is the base for the development of any country both technologically and economically. Ethiopian being one of the Least Developed Country (LDCs), it suffers a lot from teleological backwardness and hence poor economy. This paper tries to investigate the production behavior and determine the rate of technological progress of selected industries of the Ethiopian manufacturing sector over the period 1978-1998 using results from the Cobb-Douglas and the constant Elasticity of Substitution (CES) production functions and the Growth Accounting technique. The empirical results reveal that except one in the rest industry groups covered in the Study labour input contributed more for the increase in output. It also shows that while three industry groups exhibited a constant returns to scale, other industries exhibited increasing returns to scale in their production processes . Furthermore, low substitution possibility between capital and labour inputs in the production process has been observed. Finally, regarding the type of technology of production and the rate of technological progress, labour intensive technology was found to be the basic feature and the rate of technological progress was very low, less than 5 %, over the period of the study.