Production Behavior And Technology A Production Function Approach

The growth of the industry sector is the base for the development of any country bothrntechnologically and economically. Ethiopian being one of the Least DevelopedrnCountry (LDCs), it suffers a lot from teleological backwardness and hence poorrneconomy. This paper tries to investigate the production behavior and determine thernrate of technological progress of selected industries of the Ethiopian manufacturingrnsector over the period 1978-1998 using results from the Cobb-Douglas and thernconstant Elasticity of Substitution (CES) production functions and the GrowthrnAccounting technique.rnThe empirical results reveal that except one in the rest industry groups covered in thernStudy labour input contributed more for the increase in output. It also shows that whilernthree industry groups exhibited a constant returns to scale, other industries exhibitedrnincreasing returns to scale in their production processes . Furthermore, lowrnsubstitution possibility between capital and labour inputs in the production process hasrnbeen observed. Finally, regarding the type of technology of production and the rate ofrntechnological progress, labour intensive technology was found to be the basic featurernand the rate of technological progress was very low, less than 5 %, over the period ofrnthe study.

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