Public capital stock and interstate variations in manufacturing efficiency
This study focuses on the role of public capital stock in contributing to interstate differences in productive efficiency in manufacturing. Our motivation is to assess the role of public capital as a source of persistent regional variations in efficiency, and thus determine if public infrastructure policies might reasonably be expected to alter the competitive environment of a state's manufacturing sector. We use a stochastic frontier production function model, explicitly incorporating infrastructure capital, to examine the relative performance of the aggregate manufacturing sector across states and over time. We calculate an index of productive efficiency and estimate the determinants of statewide variations in it. These results show that variations in per capita infrastructure stocks significantly affect manufacturing efficiency. Considering the behavior of public capital as both a direct and an indirect input furthers our understanding of the role of infrastructure and its implications for regional economic development policies.
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Volume (Year): 15 (1996)
Issue (Month): 1 ()
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- Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-74, October.
- Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
- Patricia Beeson & Stephen Husted, 1986. "Patterns and determinants of inefficiency in state manufacturing," Working Paper 8603, Federal Reserve Bank of Cleveland.
- Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
- Garcia-Mila, Teresa & McGuire, Therese J., 1992. "The contribution of publicly provided inputs to states' economies," Regional Science and Urban Economics, Elsevier, vol. 22(2), pages 229-241, June.
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