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External Economies In Taiwan'S Manufacturing Industries

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  • Vei‐Lin Chan
  • Been‐Lon Chen
  • Kee‐Nam Cheung

Abstract

This paper presents estimates of indexes of internal returns to scale and external economies for two‐digit manufacturing industries in Taiwan. Estimating the returns to scale indexes involves using both SUR and 3SLS estimation procedures. The data strongly support the presence of external increasing returns to scale. The findings indicate no evidence of internal increasing return in all two‐digit manufacturing industries. According to the endogenous growth literature, the existence of externalities in production bears important economic implications in some aspects of economic growth, even though the data cannot distinguish the transmission mechanism.

Suggested Citation

  • Vei‐Lin Chan & Been‐Lon Chen & Kee‐Nam Cheung, 1995. "External Economies In Taiwan'S Manufacturing Industries," Contemporary Economic Policy, Western Economic Association International, vol. 13(4), pages 118-130, October.
    • Handle: RePEc:bla:coecpo:v:13:y:1995:i:4:p:118-130
    DOI: 10.1111/j.1465-7287.1995.tb00737.x
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    References listed on IDEAS

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    Cited by:

    1. Konstantin Kucheryavyy & Gary Lyn & Andrés Rodríguez-Clare, 2023. "Grounded by Gravity: A Well-Behaved Trade Model with Industry-Level Economies of Scale," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 372-412, April.
    2. M. Hsu & B‐L. Chen, 2000. "Labor productivity of small and large manufacturing firms: the case of Taiwan," Contemporary Economic Policy, Western Economic Association International, vol. 18(3), pages 270-283, July.
    3. Gene M. Grossman & Esteban Rossi-Hansberg, 2010. "External Economies and International Trade Redux," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(2), pages 829-858.
    4. de la Torre, Augusto & Didier, Tatiana & Pinat, Magali, 2014. "Can Latin America tap the globalization upside ?," Policy Research Working Paper Series 6837, The World Bank.

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