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Drivers of regional efficiency differentials in Italy: technical inefficiency or allocative distortions?

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  • Fabrizio Erbetta

    () (University of Piemonte Orientale, Faculty of Economics / HERMES, Higher Education and Research on Mobility and the Economics of Public Services / CERIS-CNR, Institute for Economic Research on Firms and Growth)

  • Petraglia Carmelo

    () (University of Napoli "Federico II", Department of Economics)

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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Bibliographic Info

Paper provided by Institute for Economic Research on Firms and Growth - Moncalieri (TO) in its series CERIS Working Paper with number 200802.

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Length: 22 pages
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:csc:cerisp:200802

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Keywords: Technical and allocative efficiency; Input distance function; Development policies;

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Cited by:
  1. 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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