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

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Author Info
Nigel Driffield, Max Munday

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Abstract

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 à examiner jusqu'à quel point l'investissement industriel au Royaume-Uni, conjointement avec l'agglomération géographique des industries en question, a une incidence sur l'efficacité technique. L'article relie la recherche sur l'estimation de l'efficacité technique à la documentation qui démontrent les économies dues à l'investissement direct étranger et à l'agglomération géographique. La méthodologie nécessite une estimation de la frontière de la production stochastique, avec des composantes aléatoires associées au manque d'organisation industrielle technique, et une erreur-type. L'article cherche aussìaexaminer si, oui ou non, le taux d'investissement étranger a plus d'incidence sur l'efficacité technique là où l'industrie nationale se caractérise par une productivité et une agglomération géographique relativement élevées. Les retombées de cette analyse pour la politique se voient discuter. Dieser Aufsatz untersucht, wie Investierungen ausländischer Hersteller in der Industrie des Vereinigten Königreichs sich bei gleichzeitiger räumlicher Ballung dieser Industrien auf technische Leistung auswirken. Der Aufsatz verbindet Untersuchungen der Schätzung technischer Leistung mit Veröffentlichungen, welche sich mit der Darstellung von Wirtschaften beschäftigen, die mit Direktinvestierungen des Auslands und räumlicher Ballung in Verbindung gebracht werden. Bei dieser Methodik werden Schätzungen der stochastischen Herstellungsgrenze mit Zufallskomponenten einbezogen, die mit technischer Inkompetenz der Industrie in Verbindung gebracht werden, sowie einem Standardfehler. Darüberhinaus untersucht der Aufsatz auch, ob das Ausmaß ausländischer Mitarbeit sich stärker auf technische Leistung auswirkt wo der einheimische Industriesektor sich durch verhältnismäßig hohe Leistung und räumliche Ballung auszeichnet. Es werden Implikationen der Analyse für Zielsetzungen diskutiert.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal Regional Studies.

Volume (Year): 35 (2001)
Issue (Month): 5 (July)
Pages: 391-399
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Handle: RePEc:taf:regstd:v:35:y:2001:i:5:p:391-399

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Related research
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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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Kumbhakar, Sabul C., 1993. "Production risk, technical efficiency, and panel data," Economics Letters, Elsevier, vol. 41(1), pages 11-16. [Downloadable!] (restricted)
  2. Ivan Turok, 1993. "Inward Investment and Local Linkages: How Deeply Embedded is "Silicon Glen”?," Regional Studies, Taylor and Francis Journals, vol. 27(5), pages 401-417, January. [Downloadable!] (restricted)
  3. Wang, Jian-Ye & Blomstrom, Magnus, 1992. "Foreign investment and technology transfer : A simple model," European Economic Review, Elsevier, vol. 36(1), pages 137-155, January. [Downloadable!] (restricted)
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  4. Krugman, Paul R & Venables, Anthony J, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 857-80, November. [Downloadable!] (restricted)
    Other versions:
  5. Stephen Young & Neil Hood & Ewen Peters, 1994. "Multinational Enterprises and Regional Economic Development," Regional Studies, Taylor and Francis Journals, vol. 28(7), pages 657-677, November. [Downloadable!] (restricted)
  6. Driffield, Nigel, 2001. "The Impact of Domestic Productivity of Inward Investment in the UK," Manchester School, University of Manchester, vol. 69(1), pages 103-19, January. [Downloadable!] (restricted)
  7. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
  8. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June. [Downloadable!] (restricted)
  9. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July. [Downloadable!] (restricted)
  10. Audretsch, David B, 1998. "Agglomeration and the Location of Innovative Activity," CEPR Discussion Papers 1974, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Patricia Beeson & Stephen Husted, 1986. "Patterns and determinants of inefficiency in state manufacturing," Working Paper 8603, Federal Reserve Bank of Cleveland. [Downloadable!]
  12. Blomström, Magnus & Kokko, Ari, 1996. "Multinational Corporations and Spillovers," Working Paper Series in Economics and Finance 99, Stockholm School of Economics.
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  13. Nigel Driffield & Max Munday, 2000. "Industrial Performance, Agglomeration, and Foreign Manufacturing Investment in the UK," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 31(1), pages 21-37, March. [Downloadable!] (restricted)
  14. Barrell, Ray & Pain, Nigel, 1999. "Domestic institutions, agglomerations and foreign direct investment in Europe," European Economic Review, Elsevier, vol. 43(4-6), pages 925-934, April. [Downloadable!] (restricted)
  15. Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990. "Production frontiers with cross-sectional and time-series variation in efficiency levels," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 185-200. [Downloadable!] (restricted)
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  16. Barrell, Ray & Pain, Nigel, 1997. "Foreign Direct Investment, Technological Change, and Economic Growth within Europe," Economic Journal, Royal Economic Society, vol. 107(445), pages 1770-86, November. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nuno Crespo & Isabel Proença & Maria Paula Fontoura, 2008. "FDI Spillovers at Regional Level: Evidence from Portugal," Working Papers ercwp0508, ISCTE, UNIDE, Economics Research Centre. [Downloadable!]
    Other versions:
  2. Claudia Werker, 2006. "An Assessment of the Regional Innovation Policy by the European Union based on Bibliometrical Analysis," Papers on Economics and Evolution 2006-11, Max Planck Institute of Economics, Evolutionary Economics Group. [Downloadable!]
  3. Chen, George Shih-Ku, 2009. "Agglomeration economies and the location of Taiwanese investment in China," MPRA Paper 13896, University Library of Munich, Germany. [Downloadable!]
  4. A. N. Rambaldi & Iyer & K., 2004. "Measuring Spillovers from Alternative Forms of Foreign Investment," Econometric Society 2004 Australasian Meetings 149, Econometric Society. [Downloadable!]
    Other versions:
  5. 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. [Downloadable!]
  6. Camilla Jensen, 2004. "Localized Spillovers in the Polish Food Industry: The Role of FDI in the Development Process?," Regional Studies, Taylor and Francis Journals, vol. 38(5), pages 533-548, July. [Downloadable!] (restricted)
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