Production Behavior and Technology: A Production Function Approach
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Date
2000-09
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A.A.U
Abstract
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.
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Keywords
A Production Function Approach, Production Behavior