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The Effects of Regional Capital Subsidies on Productivity Growth: A Case Study of the Greek Food and Beverage Manufacturing Industry *
Author(s) -
Skuras Dimitris,
Tsekouras Kostas,
Dimara Efthalia,
Tzelepis Dimitris
Publication year - 2006
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.0022-4146.2006.00445.x
Subject(s) - subsidy , productivity , production–possibility frontier , economics , capital (architecture) , disadvantaged , capital deepening , european union , production (economics) , total factor productivity , frontier , industrial organization , business , public economics , international trade , financial capital , capital formation , human capital , macroeconomics , economic growth , market economy , history , archaeology
Abstract. Capital subsidies form a major instrument of industrial and regional policy for economically developed countries all over the world, including many European Union and Organisation for Economic Cooperation and Development countries. Research findings have challenged the effectiveness of capital subsidies in assisting productivity growth. This paper treats capital subsidies as a new input and estimates a stochastic production frontier that is not bound by the restrictions imposed by approaches used in previous research works. It is shown that capital subsidies affect total factor productivity growth through technical change and not through scale efficiency, while the disadvantaged location of firms affects technical efficiency.