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Foreign Manufacturing, Regional Agglomeration and Technical Efficiency in UK Industries: A Stochastic Production Frontier Approach


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  • Nigel Driffield
  • Max Munday


The paper examines howfar foreign manufacturing investment in UK industries, together with the spatial agglomeration of those industries, affect technical efficiency. The paper links research on the estimation of technical efficiency,with those literatures demonstrating the economies associated with foreign direct investment and spatial agglomeration. The methodology involves estimation of a stochastic production frontier with random components associated with industry technical inefficiency, and a standard error. The paper also explores whether the degree of foreign involvement has a greater impact on technical efficiency where the domestic industry sector is characterized by comparatively high productivity and spatial agglomeration. The policy implications of the analysis are discussed. Cet article cherche a examiner jusqu'a quel point l'investissement industriel au Royaume-Uni, conjointement avec l'agglomeration geographique des industries en question, a une incidence sur l'efficacite technique. L'article relie la recherche sur l'estimation de l'efficacite technique a la documentation qui demontrent les economies dues a l'investissement direct etranger et a l'agglomeration geographique. La methodologie necessite une estimation de la frontiere de la production stochastique, avec des composantes aleatoires associees au manque d'organisation industrielle technique, et une erreur-type. L'article cherche aussiaexaminer si, oui ou non, le taux d'investissement etranger a plus d'incidence sur l'efficacite technique la ou l'industrie nationale se caracterise par une productivite et une agglomeration geographique relativement elevees. Les retombees de cette analyse pour la politique se voient discuter. Dieser Aufsatz untersucht, wie Investierungen auslandischer Hersteller in der Industrie des Vereinigten Konigreichs sich bei gleichzeitiger raumlicher Ballung dieser Industrien auf technische Leistung auswirken. Der Aufsatz verbindet Untersuchungen der Schatzung technischer Leistung mit Veroffentlichungen, welche sich mit der Darstellung von Wirtschaften beschaftigen, die mit Direktinvestierungen des Auslands und raumlicher Ballung in Verbindung gebracht werden. Bei dieser Methodik werden Schatzungen der stochastischen Herstellungsgrenze mit Zufallskomponenten einbezogen, die mit technischer Inkompetenz der Industrie in Verbindung gebracht werden, sowie einem Standardfehler. Daruberhinaus untersucht der Aufsatz auch, ob das Ausmass auslandischer Mitarbeit sich starker auf technische Leistung auswirkt wo der einheimische Industriesektor sich durch verhaltnismassig hohe Leistung und raumliche Ballung auszeichnet. Es werden Implikationen der Analyse fur Zielsetzungen diskutiert.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Regional Studies.

Volume (Year): 35 (2001)
Issue (Month): 5 ()
Pages: 391-399

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Handle: RePEc:taf:regstd:v:35:y:2001:i:5:p:391-399

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Keywords: Foreign Manufacturing; Regional Industry Agglomeration; Industry Efficiency; Industrie Etrangere; Agglomeration Industrielle Regionale; Efficacite Industrielle; Produktion Auslandischer Firmen; Regionale Industrieballung; Industrielle Leistung;


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Cited by:
  1. Chen, George Shih-Ku, 2009. "Agglomeration economies and the location of Taiwanese investment in China," MPRA Paper 13896, University Library of Munich, Germany.
  2. Nuno Crespo & Maria Paula Fontoura & Isabel Proença, 2009. "FDI spillovers at regional level: Evidence from Portugal," Papers in Regional Science, Wiley Blackwell, vol. 88(3), pages 591-607, 08.
  3. Vassilis Monastiriotis, 2014. "Origin of FDI and domestic productivity spillovers: does European FDI have a 'productivity advantage' in the ENP countries?," LSE Research Online Documents on Economics 55267, London School of Economics and Political Science, LSE Library.
  4. Krishna G. Iyer & Alicia N. Rambaldi & Kam Ki Tang, 2005. "Measuring Efficiency externalities from Trade and Alternative Forms of Foreign Investment," CEPA Working Papers Series WP042005, School of Economics, University of Queensland, Australia.
  5. Alicia N. Rambaldi & Kam Ki Tang & G. Iyer Krishnai, 2004. "Measuring Spillovers from Alternative Forms of Foreign Investment," CEPA Working Papers Series WP012004, School of Economics, University of Queensland, Australia.
  6. Nuno CRESPO & Isabel PROENÇA & Maria Paula FONTOURA, 2012. "The Spatial Dimension in FDI Spillovers: Evidence at the Regional Level from Portugal," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 12(1), pages 115-130.
  7. Dimitratos, Pavlos & Liouka, Ioanna & Young, Stephen, 2009. "Regional location of multinational corporation subsidiaries and economic development contribution: Evidence from the UK," Journal of World Business, Elsevier, vol. 44(2), pages 180-191, April.
  8. Elina Berghäll, 2008. "Revealing Agglomeration Economies with Stochastic Frontier Modelling in the Finnish ICT Industry," Discussion Papers 435, Government Institute for Economic Research Finland (VATT).
  9. Krishna G. Iyer & Alicia N. Rambaldi & Kam Ki Tang, 2008. "Efficiency externalities of trade and alternative forms of foreign investment in OECD countries," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(6), pages 749-766.


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