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Public capital stock and interstate variations in manufacturing efficiency

Author

Listed:
  • John K. Mullen

    (Department of Economics and Finance, Clarkson University, Potsdam, NY 13699-5785)

  • Martin Williams

    (Northern Illinois University, De Kalb, Illinois)

  • Ronald L. Moomaw

    (Oklahoma State University)

Abstract

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.

Suggested Citation

  • John K. Mullen & Martin Williams & Ronald L. Moomaw, 1996. "Public capital stock and interstate variations in manufacturing efficiency," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 15(1), pages 51-67.
    • Handle: RePEc:wly:jpamgt:v:15:y:1996:i:1:p:51-67
    DOI: 10.1002/(SICI)1520-6688(199624)15:1<51::AID-PAM3>3.0.CO;2-I
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-374, October.
    4. Patricia E. Beeson & Steven Husted, 1986. "Patterns and determinants of inefficiency in state manufacturing," Working Papers (Old Series) 8603, Federal Reserve Bank of Cleveland.
    5. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
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    Cited by:

    1. Arup Mitra, 2011. "Urbanization in India: Evidence on Agglomeration Economies," Working Papers id:4394, eSocialSciences.
    2. Brian A. Mikelbank & Randall W. Jackson, 2000. "The Role of Space in Public Capital Research," International Regional Science Review, , vol. 23(3), pages 235-258, July.
    3. J. Mullen & Stephen Nord & Martin Williams, 2005. "Regional Skill Structure and the Diffusion of Technology," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(1), pages 115-131, March.
    4. Ramón Mª-Dolores, 2004. "Public capital effects on spanish regions productivity: a non-parametric approach (1965-1998)," Hacienda Pública Española / Review of Public Economics, IEF, vol. 171(4), pages 57-74, december.
    5. Canning, David & Bennathan, Esra, 2000. "The social rate of return on infrastructure investments," Policy Research Working Paper Series 2390, The World Bank.
    6. Delorme, Charles Jr. & Thompson, Herbert Jr. & Warren, Ronald Jr., 1999. "Public Infrastructure and Private Productivity: A Stochastic-Frontier Approach," Journal of Macroeconomics, Elsevier, vol. 21(3), pages 563-576, July.
    7. Sun-Kwan Lee & Euijune Kim, 2015. "The effects of highway investments on production costs in the Korean manufacturing sector," International Journal of Urban Sciences, Taylor & Francis Journals, vol. 19(2), pages 182-191, July.

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