The Cobb-Douglas Production Function for South Africa Essay -- South A

Introduction For every firm to produce goods it needs inputs such as capital and do work. Mankiw (2005) refers to capital set of tools that workers use in the process of production e.g. Machineries such as computers whereas labour refers to the hours that employee invest working. Production function refers to the output of a firm, an industry or an entire economy for any combination of inputs (Banaeian and Zangeneh, 2001).Economists use production function to precise the relationship between labour and capital and according to Mankiw (2005). Production functions reveal the available technology for transforming labour and capital into output.Tang (2008) highlighted the fact that theory of productivity was proposed by Knut Wicksell in 1851 which contributed a lot towards the works of Charles Cobb and Paul Douglas. Cobb-Douglas production function was developed by Cobb and Douglas in 1928 which is a fundamental function even now in both Macroeconomics and Microeconomics. The Cobb-Dou glas production function is normally utilized by economists in the counseling of explaining the correlation between contributions of resources involved in production such as labour, capital and technology.Cobb-Douglas production function and constant elasticity of substitution functions are vie a significant role for analysis in economics.Cobb-Douglas production function is still universally used toward the analysis of productivity and growth (Felipe and Adams, 2005). Felipe and Adam accepted as true that Paul Douglas is one of the economists who deserved a Novel Price for his marvelous works. Cobb and Douglas suggested that elasticity of substitution between capital and labour should be constant or equals to one even though they did not specify ... ....worldbank.gov. (2011). Data on Gross Domestic Product and Total employment of southeastern Africa. World Bank. http//www.southafricanreservebank.co.za. (2011). Data on Fixed Capital Stock of South Africa. South African Reserve B ank Mankiw, NG. (1995). The Growth of the Nations. Brookings paper of economics activities. pp 275-326Mankiw, NG. (2005). Macroeconomics, multinational edition. Worth Publishers New YorkMankiw, N.G (2013) Principle of Macroeconomics 7th edition. Congage Learning United States of America Romer, P.M. (1986). Increasing returns and long run growth. daybook of political economy Vol 94. Pp 1002-37Romer, P.M. (1990). Capital, Labour and productivity. Journal of political economy Vol. 98, No 5 university of Chicago. Pp 339341Solow, R.M (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics. Pp 65-94