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Efficiency of Capital-Labor in Nigeria’s Mining Sector: A Cobb-Douglas Framework

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  • Kanayo Ogujiuba
  • Nancy Stiegler

Abstract

The productivity in the Nigeria’s mining sector presents significance challenges, especially in view of its prospect in diversifying the national economy. The need to uncover the efficiency by way of estimating two major production functions (i.e. capital and labor) cannot be minimized. However, this paper uses econometric technique to estimates the Cobb-Douglas production function of mining sector between 1980 and 2011 periods in Nigeria. To avoid a spurious series, unit root test was conducted based on Augmented Dickey-Fuller (ADF) to test for the stationarity or otherwise of the variables in the model. The outcome reveals that the substitution parameters α and β (substitution parameters for capital and labor) confirms the a priori expectation that the pair of α and β are positive values. Despite labor is the most significant factor of production, the study also found that other inputs such as innovations and technology are positively significant in this period of modern mining production processes in view of the global economic outlook. The study amongst others recommends strong political will of government, transparency and accountability to drive efficient and effective mining sector reform, increased capital investment in innovations, technology, and raw materials.

Suggested Citation

  • Kanayo Ogujiuba & Nancy Stiegler, 2014. "Efficiency of Capital-Labor in Nigeria’s Mining Sector: A Cobb-Douglas Framework," Journal of Economics and Behavioral Studies, AMH International, vol. 6(9), pages 760-770.
    • Handle: RePEc:rnd:arjebs:v:6:y:2014:i:9:p:760-770
    DOI: 10.22610/jebs.v6i9.535
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    1. Dr. Godwin Chukwudum Nwaobi, 2005. "The Nigerian Coal Corporation: An Evaluation Of Production Performance(1960 1987)," Industrial Organization 0501002, University Library of Munich, Germany.
    2. Michele I. Naples, 1998. "Technical and Social Determinants of Productivity Growth in Bituminous Coal Mining, 1955-1980," Eastern Economic Journal, Eastern Economic Association, vol. 24(3), pages 325-342, Summer.
    3. Charles R. Hulten & Edwin R. Dean & Michael J. Harper, 2001. "New Developments in Productivity Analysis," NBER Books, National Bureau of Economic Research, Inc, number hult01-1.
    4. Boyd, Gale A, 1987. "Factor Intensity and Site Geology as Determinants of Returns to Scalein Coal Mining," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 18-23, February.
    5. Jean-Francois Arsenault & Andrew Sharpe, 2008. "An Analysis of the Causes of Weak Labour Productivity Growth in Canada since 2000," International Productivity Monitor, Centre for the Study of Living Standards, vol. 16, pages 14-39, Spring.
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