Cobb – Douglas Production Function: application experience in the North Kazakhstan region

Abstract

In the conditions of the existing significant interregional imbalance of socio-economic development of regions, the issue of increasing the effectiveness of government decisions, including through forecasting, is of particular importance. The quality of such solutions is impossible without the use of modern methods of econometric modeling and information technology. Despite the considerable period of its existence, many scientists still consider the Cobb-Douglas production function to be a method that makes it possible to reliably display the opportunities and prospects of the economic component of the development of the region or its industrial sector. Within the framework of the study, the authors answer the question about the possibility of constructing an adequate Cobb-Douglas production function with static parameters to characterize the development of the North Kazakhstan region and its industrial sector. Empirically, both hypotheses were refuted. If in the first case one of the obtained coefficients did not satisfy our idea with its sign (it was negative), then in the second – using the least squares method, the parameters of the model were determined that did not satisfy the purpose of the study. The choice of the model is not accidental. If its development is successful, its application would make it possible to provide local authorities with a convenient, accessible and understandable tool for analysis and forecasting. However, the results obtained during the study indicate that it is necessary to consider other variations of the production function, and possibly other econometric methods and models, to synthesize several methods in order to develop an adequate model of the economic development of the region and the industrial complex of the region.