Public capital stock and interstate variations in manufacturing efficiency

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

Business · Capital (architecture · Economic growth · Economics · Economy · Frontier · Human capital · Industrial organization · Labour economics · Manufacturing sector · Microeconomics · Per capita · Physical capital · Production (economics · Production–possibility frontier · Productive efficiency · Public capital · Public economics · Public infrastructure · Public investment · Public sector · Stochastic frontier analysis · Stock (firearms · Efficiency Analysis Using DEA · Engineering · Fiscal Policy and Economic Growth · Regional Economics and Spatial Analysis · Spatial and Panel Data Analysis