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Drivers of Regional Efficiency Differentials in Italy: Technical Inefficiency or Allocative Distortions?

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  • FABRIZIO ERBETTA
  • CARMELO PETRAGLIA

Abstract

This paper estimates regional economic efficiency differentials at the firm level in the Italian manufacturing sector over the period 1998-2003. We implement an input distance function approach providing measures of both technical inefficiency and allocative distortions in the choice of input mixes. Our results confirm the substantial technical efficiency gap suffered by firms located in Southern regions, thus providing empirical support to the “structural and technological gap” interpretation of the Italian dualism. On the other hand, allocative distortions in the use of inputs show less remarkable regional differences. As for policy implications, our results suggest the need for a re-allocation of public resources for development policies from business incentives measures towards public investments.

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File URL: http://hdl.handle.net/10.1111/j.1468-2257.2011.00556.x
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Bibliographic Info

Article provided by Gatton College of Business and Economics, University of Kentucky in its journal Growth and Change.

Volume (Year): 42 (2011)
Issue (Month): 3 (09)
Pages: 351-375

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Handle: RePEc:bla:growch:v:42:y:2011:i:3:p:351-375

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Cited by:
  1. A. Lasagni & A. Nifo & G. Vecchione, 2012. "Firm productivity and institutional quality. Evidence from Italian industry," Economics Department Working Papers 2012-EP07, Department of Economics, Parma University (Italy).
  2. Petraglia Carmelo, 2011. "Il Mezzogiorno nella letteratura economica del 2011," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 4, pages 1083-1098.
  3. Alejandra Trejo, 2011. "Competitiveness And The Regional Efficiency Of The Mexican Service Sector," ERSA conference papers ersa10p196, European Regional Science Association.

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