Using of production CES-functions in the development of technological policy measures of domestic enterprises

Volodymyr Momot
Doctor of Economics, Professor, Department of Innovation Management and International Logistics, Alfred Nobel University, Dnipro, Ukraine, e-mail: vmomot@duan.edu.ua, ORCID ID: https://orcid.org/0000-0002-7512-8979

Cite this article:

Momot, V. (2019). Using of production CES-functions in the development of technological policy measures of domestic enterprises. Ed.: M. Zvieriakov (ed.-in-ch.) and others [Vykorystannia vyrobnychykh CES-funktsii pid chas rozrobky zakhodiv tekhnolohichnoi polityky vitchyznianykh pidpryiemstv; za red.: М. I. Zvieriakova (gol. red.) ta in.], Socio-economic research bulletin; Vìsnik socìal’no-ekonomìčnih doslìdžen’ (ISSN 2313-4569), Odessa National Economic University, Odessa, No. 2-3 (70-71), pp. 92-104.

Abstract

The article formulates recommendations regarding the general technical policy of domestic industrial enterprises at the present stage of economic development, based on the application of the continuation method with respect to the parameter to a forced-homogeneous and heterogeneous production CES-function in the form of a Cobb-Douglas-Tinbergen. Based on the fact that the cost of labor resources in our country is almost the lowest in the world, we can conclude that the strategic policy in the field of fixed assets of domestic enterprises claiming on full competition in the world market should be focused on replacing obsolete equipment, which significantly reduces their competitiveness. The Cobb-Douglas-Tinbergen-shaped CES-function continuation method using with respect to the parameter to a forced homogeneous production indicates the possibility of an extremely optimistic intensive industry development scenario, which theoretically can grow almost exclusively through the use of skilled highly paid labor with moderate investment activity in the field of basic production funds. The influence of non-stationary processes in the economy on the enterprise development scenario has been identified, due to which the «lag» effect has been revealed when the development trend continues to operate for a certain time despite the fact that the conditions of the economic environment have already changed significantly. Thesis interpretation about decrease of reproductive potential of the national economy on the basis of a mathematical justification for the conclusion that production factors make an ever smaller contribution to the total product as they accelerate the intensity of their use in the production process, is given. Analysis of theoretically possible (limiting) cases of the production system development based on a comparison of changes in the parameters of production function is performed. Recommendations on the technological policy of domestic enterprises at the present stage are given.

Keywords

CES production function in the Cobb-Douglas-Tinbergen form; parameter continuation method; elasticity of the labor and capital interchangeability; the law of diminishing productivity; the law of outstripping growth of labor productivity.

JEL classification: C000; C010; D240; DOI: https://doi.org/10.33987/vsed.2-3(70-71).2019.92-104

UD classification: 330.366.7:334.716 (477)

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

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