Estimation of the impact of investment in fixed assets and employment on GDP using the Cobb-Douglas function

Abstract

The main goal of the study is to determine the degree of influence of labor and investment in fixed capital on the total volume of output in Kazakhstan. This paper uses a multiple regression analysis method based on the Cobb-Douglas production function. This function is an economic and mathematical model for analyzing production factors and their role in the economic development of the country. The results of the study made it possible to identify a positive relationship between the studied variables and establish that an increase in the studied factors leads to an increase in production output. The results of the empirical analysis showed that with a change in investment in fixed capital by 1%, the volume of production will increase on average by 0.735%. Accordingly, if the employed population changes by 1%, the volume of production will increase on average by 2.737%. The study revealed a low contribution of technological progress to the development of the manufacturing industry. Based on the results of the analysis, it was concluded that there are increasing returns to the scale of production, since the sum of the elasticity coefficients of production for capital and labor is greater than one. The high contribution rate to labor costs (2.737%) indicates that the increase in labor intensity in the manufacturing industry of Kazakhstan has a stimulating effect on the economic growth of output, and also brings positive economic benefits to output.