“Quality of growth” indicators: a production function approach
Vasiliy Glazyrin, Chita State University, Russia;
Irina Glazyrina, Institute of Natural Resources SB RAS,
Transbaikal Center for Ecological Economics, Russia
Fundamental complementarity between natural and human-made capital is one of the most
important statement of Ecological Economics [1]. However it does not mean the strict
complementarity. In reality this complementarity is usually combined with some substitutability
at the margin. Let us define Y = F(H, n) the production function, where H is human-made
capital (included produced capital and labor), and n is the flow of natural resources use in
production. If, for instance, this function describes the production in forest industry, there exists
some apparent substitutability. Investments in mechanisms and labor may lead to replace the
raw-material production by high–processed industries /
It implies the efficient nature use and increasing the ratio Y/n, the output per unit of natural
resource extracted. This situation is desirable both from environmental and social point of view,
because the added value also increases. If (forest) resource n is abundant and H is scarce, then H
is the determinant of production. Under the condition of scarcity of n it becomes the limiting
production factor.
The production function reflects these properties and possesses the weak substitutability has
been proposed in [2]:
Y(H, n) = [(AH)-p + (Cn)-p] -1/p
where A and C are the coefficients, which describe the efficiency of capital use. For p   the
function Y(H, n) becomes to the minimum function
YM = min {AH, Cn},
which reflects the strict complementarity between H and n.
In this paper we examine the exponent p in the function Y(H, n) as the “quality of growth”
indicator for the economy in transition where forestry presents an essential sector. The model
territory for this study is Chita region in Eastern Siberia, Russia.
This work is elaborated within the Dutch-Russian project “Quality of growth indicators for
transition economy”. Financial support from the NWO (Netherlands) and RFBR (Russia) is
gratefully acknowledged.
1. Daly H.E., 1996. Beyond Growth – the Economics of Sustainable Development. Beacon
Press, Boston.
2. Kraev E., 2002. Stocks, flows and complementarity: formalizing of a basic insight of
ecological economics. Ecological Economics, 43, 277-286.