A Study of the Economic Productivity of Several Countries Using a Modified Cobb-Douglas Function

Abstract

The study analyzes the dynamics of economic productivity in 44 countries using a modified Cobb-Douglas production function. Aside from continuous variables such as labor, capital and energy, this model also accommodates non-continuous variables in order to provide a more accurate representation of the economic relationships. The findings reveal some rather intriguing results regarding the returns to scale and the influence of government and natural disasters on economic output. Negative returns to scale in certain countries can be attributed to factors such as declining working hours and unemployment. The 'Government' variable, despite revealing positive coefficients for most of the countries analyzed, is still nuanced in nature and requires more contextual understanding. The 'Natural Disaster' variable, meanwhile, reveals both negative and positive coefficients, thus challenging conventional wisdom and posing questions about the resilience and adaptability of economic systems in the face of adversity. The study recommends tailored policy interventions, calling for greater specialization and resource allocation in countries with lower productivity levels and sustained innovation in countries with higher productivity levels.