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Drivers of regional efficiency differentials in Italy: technical inefficiency or allocative distortions?

Author

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  • Fabrizio Erbetta

    (University of Piemonte Orientale, Faculty of Economics / HERMES, Higher Education and Research on Mobility and the Economics of Public Services / CERIS-CNR, Institute for Economic Research on Firms and Growth)

  • Carmelo Petraglia

    (University of Napoli "Federico II", Department of Economics)

Abstract

This paper estimates regional economic efficiency differentials at the firm level in the Italian manufacturing sector over the period 1998-2003. We implement an input distance function approach providing measures of both technical inefficiency and allocative distortions in the choice of input mixes. Our results confirm the substantial technical efficiency gap suffered by firms located in Southern regions, thus providing empirical support to the “structural and technological gap” interpretation of the Italian dualism. On the other hand, allocative distortions in the use of inputs show less remarkable regional differences. As for policy implications, our results suggest the need for a re-allocation of public resources for development policies from business incentives measures towards public investments.

Suggested Citation

  • Fabrizio Erbetta & Carmelo Petraglia, 2008. "Drivers of regional efficiency differentials in Italy: technical inefficiency or allocative distortions?," CERIS Working Paper 200802, CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY.
    • Handle: RePEc:csc:cerisp:200802
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    Cited by:

    1. Andrea Lasagni & Annamaria Nifo & Gaetano Vecchione, 2015. "Firm Productivity And Institutional Quality: Evidence From Italian Industry," Journal of Regional Science, Wiley Blackwell, vol. 55(5), pages 774-800, November.
    2. Agostino, Mariarosaria & Nifo, Annamaria & Trivieri, Francesco & Vecchione, Gaetano, 2016. "Total factor productivity heterogeneity: channelling the impact of institutions," MPRA Paper 72759, University Library of Munich, Germany.
    3. repec:spt:apfiba:v::y:2018:i::f:8_2_4 is not listed on IDEAS
    4. Francesco Aiello & Valeria Pupo & Fernanda Ricotta, 2014. "Explaining Total Factor Productivity at Firm Level in Italy: Does Location Matter?," Spatial Economic Analysis, Taylor & Francis Journals, vol. 9(1), pages 51-70, March.
    5. F. Pastore, 2015. "The Mezzogiorno and Crisis after Market and State Failures. A Review of Economic Literature," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 3-4, pages 525-582.
    6. V. Daniele, 2019. "Productivity and Wages: The Gap between North and South," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 2, pages 375-404.
    7. Obeng, K. & Sakano, R. & Naanwaab, C., 2016. "Understanding overall output efficiency in public transit systems: The roles of input regulations, perceived budget and input subsidies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 89(C), pages 133-150.
    8. Graziano Abrate & Fabrizio Erbetta & Giovanni Fraquelli & Davide Vannoni, 2015. "The cost of corruption in the Italian solid waste industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 24(2), pages 439-465.
    9. Carmelo Petraglia, 2011. "Il Mezzogiorno nella letteratura economica del 2011," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 4, pages 1083-1098.
    10. Annamaria Nifo & Sabrina Ruberto & Gaetano Vecchione, 2018. "Does institutional quality matter for lending relationships?," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 8(2), pages 1-4.
    11. Giannola, Adriano & Petraglia, Carmelo & Scalera, Domenico, 2016. "Net fiscal flows and interregional redistribution in Italy: A long-run perspective (1951–2010)," Structural Change and Economic Dynamics, Elsevier, vol. 39(C), pages 1-16.
    12. Alexandros Maziotis & Ramon Sala-Garrido & Manuel Mocholi-Arce & Maria Molinos-Senante, 2021. "Changes to The Productivity of Water Companies: Comparison of Fully Private and Concessionary Water Companies," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 35(10), pages 3355-3371, August.
    13. Alejandra Trejo, 2011. "Competitiveness And The Regional Efficiency Of The Mexican Service Sector," ERSA conference papers ersa10p196, European Regional Science Association.
    14. S. Auci, 2014. "The role of production chains in Italian industry: A steady connection between Italy's North-West and South," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 3, pages 617-658.
    15. A. Nifo & G. Vecchione, 2015. "Measuring Institutional Quality in Italy," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 1-2, pages 157-182.

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    More about this item

    Keywords

    Technical and allocative efficiency; Input distance function; Development policies;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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