scholarly journals Modeling Sustainable Economic Development Using Production Functions

2021 ◽  
Vol 39 (5) ◽  
Author(s):  
Oleksandr Yankovyi ◽  
Viktor Koval ◽  
Larysa Lazorenko ◽  
Olga Poberezhets ◽  
Marina Novikova ◽  
...  
Keyword(s):  
Economic Development ◽  
Labour Productivity ◽  
Production Functions ◽  
Maximum Output ◽  
Marginal Rate ◽  
Sustainable Economic Development ◽  
Output Elasticity ◽  
Factor Substitution ◽  
Optimal Capital ◽  
Mathematical Characteristics

The most popular two-factor production functions used in the process of modeling sustainable economic development are examined. Economic and mathematical characteristics of Cobb-Douglas production functions, CES-function, linear function, Leontief and Allen functions are considered, in particular, type of dependence of labour productivity in relation to capital-labour ratio of commodity production system within mentioned production functions. Their most important economic and mathematical characteristics are presented: factors average and marginal return, demand for production resources, factor substitution, factors marginal rate of technical substitution, output elasticity by factors, elasticity of factors technical substitution, optimal capital-labour ratio according to the criterion of maximum output. Comparative analysis is given to Cobb-Douglas and CES-functions, which are two production functions mostly required in practice.

scholarly journals OPTIMIZATION OF THE CAPITAL-LABOR RATIO OF INDUSTRIAL ENTERPRISES USING PRODUCTION FUNCTIONS

2019 ◽  
Vol 2019 (11-12) ◽  
pp. 34-48 ◽  
Author(s):  
Oleksandr YANKOVYI ◽  
◽  
Volodymyr YANKOVYI ◽  
Keyword(s):  
Machine Building ◽  
Production Functions ◽  
Production Factor ◽  
Analytical Determination ◽  
Marginal Rate ◽  
Industrial Enterprises ◽  
Labor Ratio ◽  
Capital Labor Ratio ◽  
Fixed Assets ◽  
Optimal Capital

Neglect of the issues of managing the capital-labor ratio at industrial enterprises and lack of information on the level of its difference from the optimal value are steadily leading to the irrational use of fixed assets and labor. This, in turn, inevitably manifests itself in decreasing competitiveness of individual domestic producers, their deteriorating financial situation and, ultimately, ends in bankruptcy. Thus, it is necessary to constantly monitor the occurrence of suboptimal capital-labor ratio, which is fraught with a relative overabundance of one of the most important production factors-resources and a decrease in the efficiency of using the other. The authors propose a procedure for the analytical determination of the optimal capital-labor ratio of a commodity producer using the marginal rate of technological substitution of resources based on dynamized production functions. This makes it possible to verify the scientific hypothesis of the relative redundancy of fixed assets compared to size of salary not only at the industry level, but also at individual machine-building and food enterprises. In particular, a number of agreed criteria for optimal capital-labor ratio (when the constructed production function adequately describes the time variation of the technical and economic indicators of the commodity producer) are justified and alternative management recommendations are developed in the case when the actual capital-labor ratio is not optimal at the enterprise. Testing of the developed theoretical and methodological provisions and practical recommendations at domestic enterprises in various industries showed that in recent years, enterprises of machine-building and food industry in Ukraine have seen a significant excess of fixed assets compared to labor remuneration. The actual excess of the required capital-labor ratio, that is, its sub-optimality in this period was formed under the influence of two main factors: (i) the presence at the industrial enterprises of a large amount of obsolete and worn-out technical and technological equipment that was used inefficiently; (ii) artificial understatement of the cost of the production factor “labor force”, manifested in the relatively low wages of staff remuneration of the enterprises under study.

scholarly journals Labour productivity as a factor of sustainable economic development of the CR agriculture

2012 ◽  
Vol 48 (No. 2) ◽  
pp. 55-60 ◽  
Author(s):  
L. Bervidová
Keyword(s):  
Economic Development ◽  
Agricultural Production ◽  
Labour Productivity ◽  
Value Added ◽  
Production Factor ◽  
Institutional Research ◽  
Sustainable Economic Development ◽  
Production Factors ◽  
Labour Costs ◽  
Efficient Integration

A basic presumption of sustainable economic development of every branch is an efficient use of production factors. As a decisive production factor, it is possible to consider labour which actives other production. In such a way, labour creates sources for reproduction and improvement of other production factors; i.e. it creates sources for sustainable economic development. Efficiency of labour use as a production factor is generally evaluated by the level of labour productivity. To express its level, various indicators are used. Using the indicator of gross agricultural production per one worker, labour productivity grows, even with the decrease of production. The growth factor is there the decreasing number of workers. Using the indicator of value added per one worker, resp. per 1 CZK of labour costs, labour productivity decreases. Market factor lowers labour productivity on both input and output sides. The contribution issues from solving of the institutional research intention CEZ: J03/98: 411100013 “Efficient integration of Czech agrarian sector into the frame of European structures – presumption of sustainable development”.

scholarly journals CAPITAL-LABOR RATIO IN UKRAINE’S MACHINE BUILDING: REALITY AND OPTIMALITY

2018 ◽  
Vol 2018 (8) ◽  
pp. 16-29 ◽  
Author(s):  
Oleksandr YANKOVYI ◽  
◽  
Volodymyr YANKOVYI ◽  
Keyword(s):  
Extreme Values ◽  
Machine Building ◽  
Production Functions ◽  
Positive Trend ◽  
Labor Costs ◽  
Marginal Rate ◽  
Labor Ratio ◽  
Capital Labor Ratio ◽  
Basic Production ◽  
Optimal Capital

The article examines the situation of appearance of a non-optimal capital-labor ratio on the basis of a comparison of the relative speed of the dynamics of indicators of labor productivity, capital productivity and capital-labor ratio in machine building industry of Ukraine in recent years. Mathematical determination of the optimal capital-labor ratio is substantiated on the basis of production functions taking into account dynamics of the most important indicators of economic activity, presented in value terms. Methodological and applied aspects of the use of the equimarginal principle from microeconomics are discussed to determine the optimal capital-labor ratio within the limits of substitutional production functions. It is proved that at the point of optimal capital-labor ratio, the marginal rate of replacement of production factors’ substitution is equal to one. The resulting conclusion is used as a basis for development of a procedure for finding optimum capital-labor ratio using econometric models, which adequately describe the relationship of time series of product sales, basic productive assets and labor costs based on substitutional production functions. The use of the proposed procedure for determining the optimal capital-labor ratio is carried out on the example of the Cobb-Douglas-Tinbergen production function, the dynamised CES-function and the linear function. The methodological recommendations on calculation of unknown parameters are presented for these functions, as well as the formulas of optimal capital-labor ratio with indicated extreme values of products sold and the total costs for basic production assets and labor payment. The obtained theoretical results are tested according to the data of Ukraine’s machine building. The hypothesis about non-optimal capital-labor ratio in 2007-2015 is confirmed in terms of volumes of sales of the industry production. It turns out that for the analyzed period of time, the basic production assets of machine building were relatively abundant compared with the payment of labor. In 2016-2017, a positive trend begins in dynamics of the capital-labor ratio in the industry to a certain reduction and a gradual approach to the optimal value.

SCIENTIFIC AND METHODOLOGICAL ASPECTS OF THE STRATEGY OF MANAGEMENT OF SUSTAINABLE ECONOMIC DEVELOPMENT OF THE SERVICE ENTERPRISE

2017 ◽  
Author(s):  
Petro Makarenko ◽  
◽  
Olena Judina ◽  
Keyword(s):  
Economic Development ◽  
Regression Models ◽  
Performance Indicator ◽  
Restaurant Industry ◽  
Capital Investments ◽  
Progressive Development ◽  
Sustainable Economic Development ◽  
Commercial Activities ◽  
Marketing Activities ◽  
Methodological Aspects

The article substantiates the methodological tools for the formation of the mechanism for implementing the strategy of sustainable economic development of the hotel and restaurant industry. To ensure the operation of the mechanism, a system of indicators and criteria for assessing the process of sustainable economic development, based on accelerating the growth of efficiency and reducing operating costs through reserve and progressive development of resource potential of the enterprise. The paper identifies the stages of sustainable economic development of the enterprise, which include: identification, grouping and analysis of factors of progressive and reserve development, their classification and determining the degree of influence on the growth of operational (production and administrative and marketing) activities, progressive development of resource potentials; development of regression models and indicators of progressive, reserve and sustainable (static and dynamic) economic development, which explain the patterns of influence of factors on performance indicators; forecasting the parameters of efficiency and cost of production and commercial activities; formation of the volume and structure of investments by types of capital investments that ensure the progressive development of resource potentials, economic growth and sustainability of the enterprise. A methodology for creating regression models and indicators was developed, which provided an opportunity to assess and predict the ratio of resource costs and the level of operational efficiency, as well as change the performance indicator by changing the values of factor parameters or their total value in different combinations. The algorithm of the organizational and economic mechanism of realization of strategy of management of steady economic development of the enterprise of hotel and restaurant sphere is constructed. This algorithm provided the ability to determine the reserves of available resources, as well as to establish the required size and structure of capital investments that reduce costs and increase the efficiency of production and administrative activities.

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