Premium
Public capital stock and interstate variations in manufacturing efficiency
Author(s) -
Mullen John K.,
Williams Martin,
Moomaw Ronald L.
Publication year - 1996
Publication title -
journal of policy analysis and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.898
H-Index - 84
eISSN - 1520-6688
pISSN - 0276-8739
DOI - 10.1002/(sici)1520-6688(199624)15:1<51::aid-pam3>3.0.co;2-i
Subject(s) - public capital , stock (firearms) , per capita , public infrastructure , economics , industrial organization , business , production–possibility frontier , stochastic frontier analysis , public sector , frontier , physical capital , manufacturing sector , productive efficiency , capital (architecture) , production (economics) , public economics , human capital , microeconomics , labour economics , economic growth , economy , public investment , engineering , mechanical engineering , population , demography , sociology , political science , law , history , archaeology
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.