Production Function Estimation in Manufacturing Industry of Latvia

This paper investigates a new data set for the analysis of productivity in Latvian manufacturing industry. Research on productivity when the manufacturing plants in an industry operate at certain capacity, using as an example Latvian manufacturing companies data for the period 2000-2009 are conducted. This paper reviews a new data set for productivity analysis in Latvian manufacturing industry. The main goal of this paper is to estimate this rate of growth based on technological utilization using an econometric production function framework. Paper underlines that implementing econometric production functions using specific data leads to effect on capital utilization, concerning that various studies have argued that failure to account for variable capital utilization decreases measuring technological change. This data are very crucial to estimate the rate of growth of technological change that is embodied in equipment capital, investment in capital is essential factor in order to gain the benefits from technological progress. The importance of embodied technological change for economic growth are undoubted