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Return to scale and external economies: empirical evidence from Greek two-digit manufacturing industries

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  • Io Segoura

Abstract

This paper applies the methodology developed by Caballero and Lyons (1989), in order to estimate jointly the degree of internal returns to scale and the extent of external economies in Greek two-digit manufacturing industries during the period 1963-90. Overall, we find that only two industries show evidence of internal increasing returns: food products, and transport equipment. On the other hand, we cannot reject the presence of external economies. According to our estimates if an industry increases its inputs in isolation by 10% its output rises by 6%. However, if all industries act in concern its output rises by 10%, implying social constant returns to scale.

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  • Io Segoura, 1998. "Return to scale and external economies: empirical evidence from Greek two-digit manufacturing industries," Applied Economics Letters, Taylor & Francis Journals, vol. 5(8), pages 485-490.
    • Handle: RePEc:taf:apeclt:v:5:y:1998:i:8:p:485-490
    DOI: 10.1080/135048598354401
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    1. Ricardo J. Caballero & Richard K. Lyons, 1989. "The Role of External Economies in U.S. Manufacturing," NBER Working Papers 3033, National Bureau of Economic Research, Inc.
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    2. George Petrakos & Georgios Fotopoulos & Dimitris Kallioras, 2012. "Peripherality and Integration: Industrial Growth and Decline in the Greek Regions," Environment and Planning C, , vol. 30(2), pages 347-361, April.
    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. Oltheten, Elisabeth & Pinteris, George & Sougiannis, Theodore, 2003. "Greece in the European Union: policy lessons from two decades of membership," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(5), pages 774-806.
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    7. 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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