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A Tim E Series Production Function Analysis of Postw Order Number 9307783 A time series production function analysis of postwar Romanian industry: Its branches and regions Hunt, Scott Edward, Ph.D. The Ohio State University, 1992 U MI 300 N. Zeeb Rd. Ann Aibor, M I 48106 A TIME SERIES PRODUCTION FUNCTION ANALYSIS OF POSTWAR ROMANIAN INDUSTRY: ITS BRANCHES AND REGIONS DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of the Ohio State University By Scott Edward Hunt, B.S., M.A. The Ohio State University 1992 Dissertation Committee: Approved by W.W. Eason W. Boal Advisor R. Steckel Department of Economics ACKNOWLEDGEMENTS I wish to express my deepest appreciation to Dr. Warren W. Eason for his guidance, patience, and direction throughout the research and writing of the dissertation. I also express my utmost appreciation to Dr. William Boal for his insightful comments throughout this entire endeavor. I also wish to thank Dr. Richard Steckel for his suggestions and comments. To my parents, Richard and Lucille, I thank you for never questioning my decisions and always supporting my educational pursuits. To my wife, Jane, I truly appreciate your patience and I sincerely thank you for all your encouragement and your undying confidence in me. Finally, I wish to thank all those with whom I have shared my graduate experiences, thank you for making this a pleasant experience. VITA May 8,1963 ........................................ Born - Geneva, Ohio 198 5 .................................................. B.S. John Carroll University, University Heights, Ohio 198 6 .................................................. M.A. Ohio State University, Columbus, Ohio 1990-1992 ....................................... Lecturer of Economics, Ohio State University, Lima, Ohio 1992-Present ...................................... Professor of Economics Columbus State Community College, Columbus, Ohio FIELDS OF STUDY Major Field: Economics Primary Fields: Soviet and Eastern European Economics International Trade Secondary Fields: Labor Economics Economic History TABLE OF CONTENTS ACKNOWLEDGEMENTS i i VTTA i i i LIST OF TABLES.................................................... v iii LIST OF...................FIGURES................................................... xv CHAPTER PAGE I. INTRODUCTION: ROMANIA AND ITS POSTWAR INDUSTRIAL DEVELOPMENT.......................................... 1 Why Romania? ..................................................... 1 Industry’s Role in a Socialist Economy .............................................................. 2 Postwar History of Romanian Industry .................................................................. 4 A Comparison with the USSR .................................. 12 Problem Statement ............................................. 13 Contributions .......................................................... 15 Chapter Descriptions ......................................... 18 II. DATA, METHODOLOGY, AND PRODUCTION FUNCTIONS... 21 Introduction ........................................................ 21 The Output Data Series ...................................... 22 The Labor Data Series ............................................ 23 The Capital Stock Data Series ........................... 24 Data Reliability .................................................. 25 CHAPTER PAGE Production Function Models ............................... 29 The Cobb Douglas (CD) Production Function.. 29 The Constant Elasticity of Substitution Production Function ............................................ 30 The Trans-log (TL) Production Function 32 Total Factor Productivity ................................... 33 Production Function Acceptance Criteria 34 III. THE PATTERN OF GROWTH OF THE ROMANIAN INDUSTRIAL BRANCH......................................................... 37 Introduction ......................................................... 37 Elements of the Methodology .................................. 39 Data and Sources .................................................... 45 Output .............................................................. 45 Inputs ............................................................... 45 Labor Input ........................................................ 46 Capital Input ................................................... 47 Total Factor Inputs ........................................ 48 Measures and Results .............................................. 49 Elasticity of Substitution ............................. 53 Returns to Scale ................................................. 53 Total Factor Productivity .............................. 54 Electrical Consumption ....................................... 58 Implications ............................................................. 60 Structural Change .................................................... 82 Comparisons ............................................................ 87 Schatteles and Mihailescu ............................. 87 Soviet Industrial Production ......................... 92 Summary of Conclusions .................................... 95 v CHAPTER PAGE IV POSTWAR GROWTH OF THE ROMANIAN INDUSTRIAL BRANCHES AND REGIONS........................................ 99 Introduction ......................................................... 99 Data and Sources .................................................... 100 Output .............................................................. 100 Labor. ................................................................ 101 Capital ............................................................. 102 Regional Gerrymandering ............................... 106 Data Reliability .............................................. 110 Total Factor Inputs ........................................ 111 Measures and Results: Industrial Branches 112 Direct Effects ..................................................... 112 Capital ............................................. 118 Labor. ................................................................ 121 Summary of Direct Effects ........................... 123 Indirect Effects: Industrial Branches .................... 126 Heavy Industrial Group ................................... 126 Light Industrial Group ................................... 140 Romania and Soviet Comparison: Industrial Branches .............................................................. 155 Regional Analysis ................................................ 160 Output .............................................................. 160 Capital ............................................................. 166 Labor. ................................................................ 169 Summary of Direct Effects ........................... 172 Indirect Effects: Regions.................................... 172 Romania and Soviet Comparison: Regions 191 Implications ............................................................. 194 Direct and Indirect Data Concerns ..................... 198 Structural Change: Industrial Branches ................ 203 Conclusions.......................................................... 211 vi CHAPTER PAGE V. CONCLUSIONS................................................................... 218 APPENDICES PAGE A. Graphical Appendix ......................................................... 229 Growth Rates of Output, Labor and Capital: Industrial Branches ............................................. 229 Rates of Total Factor Productivity: Industrial Branches ................................................................ 247 Growth Rates of Output, Labor and Capital: Regions .................................................................. 272 Rates of Total Factor Productivity: Regions 290 B. Data Transformations .......................................................... 303 Indexing the Data .................................................. 303 Output ............................................................... 303 Capital .............................................................. 305 Labor. .................................................................. 306 Capital Stock Estimation .................................... 306 C. Geographical Conversions ............................................ 316 Coversions ............................................................ 316 Areas ...................................................................... 318 LIST OF REFERENCES...................................................... 322 vi I LIST OF TABLES TABLE PAGE 1. Percentage of contribution made by industrial branches to overall industrial production ...................................... 11 2. Possible data set combinations ...................... 49 3. Cobb Douglas production function results Inputs: Romanian capital stock, wage earners Romanian industrial sector, 1951-85 and 1960-85 ........................................................... 52 4. Cobb Douglas production function results Inputs: Romanian capital stock, wage earners electricity, Romanian industrial sector 1960-85 ........................................................... 59 5. Population shares, urban and rural, industrial and agricultural sectors, Romania, 1930-85.. 67 6. The annual total employment and annual changes in total employment in the agricultural and industrial sectors (in 1000’s), Romania 1950-81 ............................................ 69 viii TABLE PAGE 7. Tractor horsepower per 1,000 hectares of agricultural land and per 1,000 workers
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